A couple bits of news on the “fee” front from over the weekend. Good news out of Oz as Qantas has cut one of the more irrational fees they have. Not so good news out of Chicago, however, as United added a somewhat significant fee to their arsenal, cutting a benefit that many travelers have taken advantage of for years.
First, the good news. Qantas, for reasons that I don’t quite understand, had a fee for joining their frequent flier program if you were a resident of Australia or New Zealand. Nothing like setting up a scheme to encourage loyalty and then charging folks a premium to join. Qantas finally appears to have gotten smart on this front and plans to cut the fee out of their scheme. They are also increasing their partner earning options, adding Woolworths and a number of restaurants into the fold. That’s good news down under.
United, on the other hand, has made another decision in an effort to shore up their books. For many years airline passengers in the United States have been able to buy tickets at any point, knowing that the fares might drop and that they could call the airlines and get a refund or credit for the difference. Over the past several years many airlines have cut that benefit. Specifically they charge the going rate of their “change fee” on restricted tickets. Most change fees these days are at least $150, which means that a fare has to drop a LOT for this type of deal to be of value. As of March 20, 2009, United has joined the ranks of the airlines charging for this sort of change. They did it very quietly, adding a note about the new “administrative fee” to the fine print in their fare rules on Friday afternoon. This has upset a number of customers (at least the ones who have figured this out over the weekend).
United is the last of the legacy carriers to apply this policy, so they aren’t alone by any means. There are still a few airlines that offer such a deal – jetBlue, Southwest and Alaska Airline – but overall it is a benefit that seems to be disappearing rapidly. And I’m completely OK with that. I’m sure that I’ve benefitted from the program at some point in my life. I don’t really remember it, but I am sure I did. It seems like something I would have paid attention to. But I cannot figure out why this sort of policy is really a great thing. I buy tickets when I’m happy with the price and don’t if I’m not. I get that it does take away one little chance that the customer has to get something back from the airline, but that is part of the game in my view. I don’t expect to pay them more when the fare goes up after I’ve bought my tickets, so why should I get money back if the fare drops?
The real question is whether this will help or hurt their revenue flow. There are probably cases of people spending money to confirm the ticket knowing that they can get a voucher if the fare drops, likely using yapta.com as a resource to know when that happens. So that was revenue now with vouchers issued later. If this policy change causes any drop in bookings that will mean a loss of “now” revenue though less lost future revenue, too. Plus the potential increased revenue of people paying the fee. Of course, as quietly as this happened I doubt that many people at all will notice or that it will really affect anything adversely for United, even as many frequent travelers cry wolf.
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