United Airlines is ready to change. Or, perhaps more accurately, the company is ready for passengers to change their plans more often. In a major policy shift the carrier will no longer charge travelers a fee to change their booking on most domestic tickets. And, unlike the temporary waiver of this fee in place over recent months, this change is set to last forever.
Change is inevitable these days – but it’s how we respond to it that matters most. When we hear from customers about where we can improve, getting rid of this fee is often the top request. Following previous tough times, airlines made difficult decisions to survive, sometimes at the expense of customer service. United Airlines won’t be following that same playbook as we come out of this crisis. Instead, we’re taking a completely different approach – and looking at new ways to serve our customers better.– Scott Kirby, CEO of United Airlines
The typical domestic change fee runs $200, potentially leading to big savings for passengers. But, in aggregate, the cost to the company in removing the fee is likely less significant than one might think. United charged $2.4 billion in ancillary fees in 2019. But only a quarter of that was tied to ticketing change fees. That share is shrinking as baggage fees and other in-flight charges grow. With expectations of almost no change fees charged in 2020 it is easy (easier??) for United to reset the benchmark of what ancillary and overall revenue streams should look like for the company. And to earn a bit of customer goodwill along the way.
Not quite the Southwest approach
Not surprisingly the move is being compared to how Southwest Airlines approaches its change fees. While the policies are now similar Southwest’s continues to hold a couple advantages. If a United customer changes to a less expensive itinerary the airline will keep the difference. When changing to a more expensive ticket the customer still pays the higher fare. Under Southwest’s policy the funds are truly fungible so customers keep the difference on a cheaper flight. That stored value in the passenger’s travel bank makes it more likely that they will return to the carrier the next time around for a “discount” on a future trip, though the money is already paid to the airline. United gets to cash in on that breakage immediately, but it does not have quite as strong a draw for the next purchase because the stored value is not present.
Southwest also applies the rules to all its fares, not just domestic flights. While the route network and fare structures are different, particularly with respect to joint ventures and partners, United’s approach is slightly less flexible in that regard.
United’s new rules also do not apply to Basic Economy fares. Those still do not permit any changes, even with a fee. Southwest does not have that type of fare in its offerings.
More flexible standby rules, too
United is also adjusting its standby and same-day change rules starting on 1 January 2021. The company is removing the $75 standby fee for all passengers starting next year. For MileagePlus Premier (elite status) members the company will also waive the confirmed same-day change fee in the new year.
Reduced award fees
Finally, United Airlines is changing the rules about change fees on its award travel bookings. Currently the company charges different fees for changes or cancellations based on whether it is more or less than 60 days from travel. Under the new rules the window shrinks to 30 days and only applies for cancelling a reward within that window. Changes outside that timeframe, including cancellations, are now fee-free.
How long until forever?
United promising the fee changes as permanent is a strong statement and could trigger other airlines to make similar adjustments. A cynic could be forgiven for questioning just how long these permanent changes will last, however. After all, airlines have been clear in the past that such temporal constructs can have varying interpretations.
But at least we should have a few good years out of this move, depending on how well the overall industry rebounds.
A favor to ask while you're here...
Did you enjoy the content? Or learn something useful? Or generally just think this is the type of story you'd like to see more of? Consider supporting the site through a donation (any amount helps). It helps keep me independent and avoiding the credit card schlock.