Without warning, United Airlines raised change fees on tickets yesterday by $50, pushing fees on a restricted domestic ticket from $150 to $200 and from $250 to $300 on an international ticket.
After many expressed indignation on Flyertalk, UA Insider posted the following this morning–
Apologies for not being able to respond sooner. As is typically the case with this realm of the business, I can’t provide any insight into the new change fee levels other than to say they are an adjustment to better compensate for the costs incurred when a traveler elects not to fly in a reserved seat. However, what I can tell you is that the new change fee rates are only applicable for tickets issued on or after April 18. No impact to what you may have already had on the books.
A very disappointing rationale that the facts do not bear out.
Does it really cost United $300 for an agent to switch the date on a Chicago – London trip eight months before departure? Of course not. It probably helps the carrier, allowing it to sell the seat at a higher price.
SHARES (United’s passenger service system) is able to offer upgrades, mileage purchases, and other add-ons at dynamic prices based on availability, so it is curious that the change fee structure is so rigid. United award tickets allow for free date and routing changes 21 days or more before departure and United could have distinguished itself from the pack of legacies by adopting a similar approach to revenue tickets. Instead, they went in an an opposite direction.
And speaking of SHARES, say you bought a $900 restricted international ticket and need to change the date. Your new ticket happens to be only $600, meaning that with the $300 change fee factored in, it should be an “even exchange.” Not with SHARES. Instead, you’ll be charged an additional $300 for the change fee then receive the $300 difference between the original and new fare in the form of a travel credit. That is just ludicrous.
I trust United crunched the numbers and found that the figures made sense, but I just cannot help but to see this as another example of United shooting itself in the foot–more cutbacks, more fee hikes, less transparency.
Meanwhile, American Airlines is taking a different approach to ancillary revenue from change fees, selling upfront what amounts to insurance to change your flight through its Choice Essential package. For a cost routinely less than half of what the change fee would be, you can modify your flight without fee (just pay any fare difference) and also enjoy priority boarding and a free checked bag. This afternoon, an e-mail went out to AAdvantage customers highlighting this program–
I cannot say which approach will generate more revenue, but it is clear what approach is more customer friendly.