In the last 48 hours we have seen that over the decades the U.S. What’s the most positive change in airlines policies – the changing fees (for most route and fare types) have been permanently eliminated by Alaska, American, Delta and United!
While most of us now understand why this policy is understood, how will this evolve over time, and will this change really be as promised? I felt like sharing my thoughts on how I developed these ideas …
Airlines now need to waive change fees
I think it makes sense for everyone to understand how change fee-cutting airlines now and in the near future:
- Airlines are struggling to persuade people to book future trips, given the uncertainty there.
- We have seen airlines introduce travel waivers, but they have been temporary and in some cases quite confusing.
- For the next few years (at least), consumers need relief, and this policy is changing
Airlines need to give customers relief right now
What happens when the journey heals?
Customers are in control right now. The logical question is that once the airline industry improves. Historically, the U.S. Airlines have made billions of dollars a year through affiliate fees, and they are not charities, so surely they are not going to forgive conversion fees just out of the mercy of their heart?
If you ask me, this new policy change actually makes sense in the long run, and reflects a big shift in how airlines come to ticket prices.
Here are some factors to consider:
- Over the past few years, basic economy fares have been introduced by airlines to better compete with ultra-low cost carriers; These fares cannot be changed or canceled
- Before the epidemic, airfare was just as affordable, balanced for inflation
- All while the airlines have been increasing the changing fees over time, at many stages the changing fees were more expensive than the value of the ticket
Let me give you an example of airline ticket prices that might illustrate this. Take for example a one-way American Airlines flight from Tampa to Miami, where the prices are as follows:
- The basic economy fare is $ 38
- The main cabin rent is $ 73 (1.9x basic economy)
- The main cabin flexible fare is 2 262 (6.9x basic economy)
- The main cabin full flexible fare is 414 (10.9x basic economy)
The airline has worked hard to create fare types for any customer, yet nothing is missing here? What if the customer wants some relief at a reasonable price? Is it logical that the cheapest main cabin flexible ticket is about seven times more than the basic economy and three times more than the main cabin?
One of the advantages of the main cabin over the basic economy is that tickets can be changed for a fee. That’s a ridiculous estimate when the conversion fee is 200 200, and your ticket is worth less than that.
With the abolition of changing fees, I think airlines are creatively addressing this issue.
Airline prices are not sensible at all
The basic economy will become the new “normal” fare
Once travel is recovered, airlines can actually waive conversion fees on non-basic economy tickets. The grip is that the likelihood of a price difference between a “regular” economy and a basic economy will increase over time.
Honestly that’s something I can’t blame the airlines for. For the “big three” US carriers, there is currently no fare that will give you a discount without paying more for your ticket. May be long term, we will see the premium of “regular” economy by an additional $ 25 per ticket or something.
I think the general purpose of this was clarified by American Airlines yesterday. While announcing the waived conversion fees, American Airlines also announced that basic economy passengers will be less restricted, and will be able to pay for seat assignments, upgrades, priority boarding and more.
In other words, if the underlying economy is less restrictive and offers an unbundled experience, it is very easy for an airline to argue that a “regular” economy is a bundled experience for which you should be willing to pay a higher premium.
Expect the economy to “buy” to increase spending
Bottom line
Airlines that eliminate conversion fees are a positive development, and it won’t surprise me to stick around in the long run. However, once the journey recovers, I expect the price gap between the basic economy and the “regular” economy to continue to grow, to show that regular tickets offer a bundled experience with greater flexibility.
Ultimately it’s okay by me and perfectly justified, as the lack of a middle ground between a non-refundable ticket and a quickly more expensive full refundable ticket seems like a missed opportunity.
How do you see airfare evolving with a changing fee?
