In the near future, airlines expect fewer business travelers will fly. That means they need to attract people going on vacation. And a lot of those consumers do not like change fees.
When CEO Scott Kirby said Sunday that United Airlines would stop charging change fees on many fares, the airline received more positive press than at any time in recent memory. But while United won the news cycle, some of its competitors have jumped ahead, introducing more customer-friendly policies.
It’s perhaps another sign U.S. airlines are moving away from the commoditization of airline ticketing. Yes, the big ones all have fallen in line on the headline — no-change fees — but the details of their plans are different enough that passengers may want to choose which they prefer. Some consumers may want to chase the most flexible policy, even if it means paying more.
Four U.S. airlines so far have announced plans to stop levying domestic change fees on all but their cheapest basic economy fares, which compete with ultra-low-cost-carriers. The four will join Southwest Airlines, which has never charged customers to change tickets. Among the larger, full-service U.S. airlines, only JetBlue Airways has not moved, though to stay competitive, it soon may join.
Despite the announcements, not every airline has fleshed out its policy yet, with a couple — perhaps caught off guard by United’s announcement — pushing out vague statements about retiring fees. And some airlines may tweak policies over time, perhaps to match or one-up a competitor.
Based on what we know so far, here’s how each airline’s policy shakes out. We have ranked them from most customer friendly, to least.
1. American Airlines
United beat American in the race for media attention, but American’s new policy is less restrictive and more customer friendly.
Key to American’s policy is something called, “residual value.” It works like this: If an American customer wants to cancel a ticket and rebook a cheaper flight, American will give the passenger a rebate for the difference, with a travel voucher. At United, if the new price is cheaper, the airline will keep the difference.
There’s another disparity, too. While United’s no-change fee policy covers the 50 U.S. states, Puerto Rico and the U.S. Virgin Islands, American’s waiver also works for Canada, Mexico and Caribbean.
American is also introducing less restrictive policies for changes to award tickets.
2. Southwest Airlines
This must be odd for Southwest. For so long, it has bragged about how it was the only U.S. airline not to charge passengers to change their tickets. If they had to cancel, they could get full credit, which they had to use in one year from the initial purchase date.
Southwest’s change fee policy remains as good as ever — it gives residual value — but some competitors have moved past it on another front. United and American are bringing back free standby, offering customers a chance to move to an earlier flight so long as empty seats remain. Both airlines had charged $75, except to elite frequent flyers.
Southwest does not offer standby, either for free or a charge. Passengers who want to switch flights last minute have only one option — exchange their old ticket for a new one, often at an expensive cost.
3. United Airlines
We don’t know much about what Delta Air Lines or Alaska Airlines plan, and JetBlue Airways has not said anything about its future fee structure. All three eventually could offer richer policies than United.
But for now, we’ll slide United into the No. 3 spot, if only to reward it for moving first. Who knows? If United hadn’t moved on Sunday, the entire industry might still charge for ticket changes, or standby.
The airline had an impressive rollout over the weekend, and it deserves the kudos it is getting. How can consumers not be excited? Major airlines will no longer charge them $200 to change a domestic ticket, provided it is not a basic economy fare. Customers have hated that fee for decades.
United is also loosening restrictions on award ticket changes, which should help some customers.
4. Alaska Airlines
Alaska’s announcement Tuesday was short on details, but we’ll give it credit because it already had less restrictive policies than many competitors. In recent years, it has only charged $125 for a domestic change, not $200 like American, United and Delta. Also, unlike many other carriers, Alaska exempted many of its elite frequent flyers.
We do know two basic elements of Alaska’s new policy. It is eliminating change fees on all tickets, other than basic economy fares. And its policy covers all of Alaska’s routes, including flights to Mexico and Costa Rica.
Saver fares — Alaska’s name for basic economy — will not qualify.
5. Delta Air Lines
Delta CEO Ed Bastian is fiercely protective of his airline’s brand, and he’s usually not the type of person to settle for fifth place on a key customer issue. For that reason, Delta soon may announce new policies and leapfrog the others.
But for now, Delta has been cagey. It released a statement on Monday saying it no longer will charge change fees on flights within the domestic United States, Puerto Rico and the U.S. Virgin Islands. Its statement said nothing about residual value credit, free standby or award tickets.
6. JetBlue Airways
JetBlue is the only one of the six non-discount U.S. airlines not to alter its change fee policy. Given the competitive nature of the business, it seems unlikely JetBlue will hold out for long.
JetBlue did not immediately reply to a request for comment.
7. (Tie) Spirit Airlines, Frontier Airlines, Allegiant Air and Sun Country Airlines.
None of these ultra-low-cost-airlines has said it will change its policies. While anything is possible, the four are unlikely to make any changes.
These discount airlines do compete with larger carriers. But the bigger airlines mostly price-match with basic economy fares. Since those fares will remain restrictive, ultra-low-cost-carriers likely may not be threatened by these policy changes. Even if they retain fees, they will not be at a competitive disadvantage.
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Tags: american airlines, change fees, covid-19, delta air lines, jetblue airways, southwest airlines, united airlines
Photo credit: American Airlines has introduced new customer-friendly policies. Pictured are a parent and child on one of the airline's aircraft. American Airlines