United has upped their standard domestic change fee on a non-refundable ticket from $150 to $200 (and has also gone from $250 to $300 as the standard on their international tickets). This applies to tickets purchased from April 18 onward, purchases before then would incur the change fee in effect at time of purchase if making a change. Other airlines have not yet matched this change that I have seen.
When my business travel life started in earnest domestic change fees were generally $50. Sometime in the late 90s they moved to $75, and in 2001 the standard became $100.
When JetBlue started flying their change fee was $25 and flight credits were cancellable — if you weren’t going to take the trip you would cancel your reservation and for that $25 fee the balance would be usable by someone else.
Another change that several airlines have put in place in recent years — US Airways, and then United with the change to Continental’s reservation system March 3 of last year — is that the change fee must be paid separately from the new ticket. If you bought a $500 ticket with a $150 change fee, and applied your credit to purchase a $350 ticket you would still have to pay the change fee rather than using the credit to cover the fee.
United claims the change is ‘to better compensate for the costs incurred when a traveler elects not to fly in a reserved seat.’
I wish that airlines (and business generally) wouldn’t feel the need to justify changes on the basis of costs. In other words, I would prefer they didn’t lie.
Now when someone cancels a ticket at the last minute that’s costly indeed if the seat ultimately goes out empty. Of course sometimes that means a cheap ticket is replaced by a much more expensive last minute ticket in which case the change is actually very profitable to the airline indeed.
But an airline’s opportunity cost is hardly constant, as Matthew points out there’s virtually no cost to the airline to make a change months prior to departure. And yet the exact same fee is applied. Which is especially ironic since not only does United’s computer system allow it to adjust fees on a dynamic basis, that capability for dynamic upselling was one of the primary reasons they adopted the Continental SHARES system rather than the more user-friendly and reliable United system.
Ben predicts that other airlines won’t match the change fee increase, but that United will stick with theirs.
I disagree. I don’t know whether other airlines will match or not but I would expect change fees, at least in competitive markets, to normalize across most airlines. If other airlines don’t match then I would expect a bit of retrenchment (quietly, not admitting defeat) at least on some routes. People do book on the basis of change fees at some margin, or at least airlines think that they do, because it’s not uncommon to see different change fees in different markets for some domestic carriers. In the past I’ve frequently seen lower change fees from Delta in markets where they compete directly against Airtran , e.g. while i haven’t checked to see if this is still the case one would often find lower change fees from Delta where they compete head-on with Airtran since Airtran’s change fee is $75.
Southwest of course currently has no change fees (though on day of departure the only change option is buy up to full fare). Although they have been expected to start adding more fees and rolled out a $75 change fee on some fares although quickly removed it calling the change a ‘mistake’. It didn’t come out of nowhere though and may have just been premature.
I do think United can charge whatever they want as long as it’s disclosed up front. In some ways I’m surprised that restricted tickets allow changes at all, but that’s the equilibrium in the current marketplace. All things equal I’d buy other airline tickets provided the equilibrium doesn’t change with other airlines matching the higher fees. And indeed, higher change fees on American would make buying up to their Choice Essential fares for $68 all that much more attractive, since those incur no change fees.
For me, a $200 change fee simply means that if I’m changing the return portion of a trip it’ll often be cheaper just to throw away that return and buy a new one-way ticket (which itself might incorporate a throwaway to save money).