Business fliers have adjusted to many airline fees. Baggage fees; upgrades; advance boarding and Wi-Fi are all additional fees business travelers have grown to accept. There are others, however, where one must wonder who came up with the concept of the fee, and how.
For instance, consider the fee charged for bringing the family pet on board. Everyone loves their pets, but bringing an animal into the cabin poses a potential risk. A plane won’t make an emergency landing if an animal has an “accident”. But what if the pet bites another passenger (this has happened), or if a passenger sues the airline after suffering a near-fatal allergic reaction. In this instance, there is a potential cost to the airline to allow pets in the cabin, and they’re covering their responsibility with the fee. That’s fair.
But the change fee on non-refundable airfares? This is not so fair. In 2015, airlines charged over three billion dollars in change fees. While 2016 numbers are not available yet, know that the number trended well north of the 2015 number.
Think about it - what’s the “real cost” to an airline to change your ticket? When you cancel your flight, especially if you got a great price, the airlines (which now fly at an occupancy rate of between 85% - 90%) are immediately going to resell your seat. And, at a much higher price if you cancel close to flight time. Or, they’ll use your empty seat to accommodate standby passengers, who are probably paying a standby fee of up to $150, depending on the flight.
And think about this; airlines don’t pay you a fee when they change YOUR schedule.
Does it really cost an airline $200 to change your date of travel or cancel a trip? And that’s for domestic fares. It’s double that for international changes, usually $400 or more. It doesn’t cause the airline lost revenue in extra employment expense, as you do all the work yourself on a computer.
How does one avoid a change fee, other than never having a change in plans or buying a refundable fare? It’s difficult, but not impossible. I don’t mean to sound like an employee of a certain airline, but simply put, fly Southwest if possible. Southwest doesn’t charge for changes and cancellations. And if a seat is available on any flight, one can use frequent flyer points to grab that seat. Not so with other airlines, who usually offer between four to eight seats for frequent flyer points.
Another simpler way to avoid change fees is to use the right (airline) credit card. Or, if the cancellation is due to an illness or injury to you or a relative or traveling companion, you can sometimes get the fee refunded by the credit card company. Travel insurance, if you bought it, might also provide a refund for the same reasons.
And, as we at TravelPlex have mentioned to our clients numerous times, the new Basic Economy fares launched by Delta and United, and most recently American, can’t be changed at all, fee or no fee. This is a policy replicated from Spirit Airlines.
So why do airlines charge this fee at all? One explanation, besides, of course, padding their bottom lines, is simple: the higher the fee goes up the more likely travelers - especially business travelers - will buy more expensive refundable airfares (it used to be free on all airlines. Then was introduced at $50 in the 1990s; then jumped to $100, then $150, and to the current rate of $200 when in 2013 United further increased the fee. This was immediately copied by the other legacy airlines. Rumors abound that the fee will rise to $250 in 2017). As the price variance between non-refundable and refundable fares lowers, the incentive to buy refundable fares, which can be changed without a fee, becomes greater. In fact, many corporate travelers trying to achieve minimum spends to qualify for frequent-flier status, may even convince their corporate travel departments to allow them to buy higher priced refundable tickets. Their argument, “…there’s a good chance I’ll need to change my flight anyway,” or simply to give themselves flexibility if a meeting is canceled or runs shorter than originally planned, so they get back to the office (or home…) that much sooner.
Think about it: if the average airfare is $500 and one day the change fee goes up to $300, wouldn’t you just buy the refundable? I’m not saying the fee will ever go up that high. Or am I? Maybe airlines will just make all low fares non-refundable, a process they’ve already tested by offering non-refundable “basic economy”.