Four of the five biggest U.S. airlines - Alaska, American, Delta and United - just announced that they are eliminating change fees on tickets* - a move that United and Delta have both described as “permanent”. This could have a major impact on the way that many companies book business travel.
For a long time, many companies’ policies have been to allow full-fare flexible tickets to be booked. This allowed passengers to move or cancel tickets without penalty should their plans change, giving them the flexibility to plan trips around meetings, not meetings around existing travel plans.
But as the two pictures below show, the cost for this flexibility comes at a significant premium. An unrestricted LAX to JFK flight on American can be almost four times as expensive as a restricted flight with a change fee.
(1) Restricted LAX-JFK fare on American Airlines, booked three weeks before travel
(2) Unrestricted LAX-JFK fare on American Airlines, booked three weeks before travel
The elimination of these change fees - which can often be $200 - has taken away any incentive for companies to book these more expensive flights. Of course, tickets that are booked nearer the travel date will still be more expensive, and companies will still have to pay for any fare differential if changed nearer to the travel date, so most policies will still require advance purchases. However, that won’t impact the benefits of buying more expensive unrestricted tickets.
It remains to be seen how much of a short-term impact this will have on both corporate and consumer airline travel. While there will be some who are delaying buying tickets due to the concern about change fees, it’s likely that health concerns will be more of a factor when determining whether to fly. Also, current inventory is still high enough that tickets booked near the travel date are still relatively inexpensive (the same LAX-JFK flight a week from today is only $172 more than an advance ticket in three weeks), so travelers can delay ticket purchases without the fear of huge price jumps.
(3) Unrestricted LAX-JFK fare on American Airlines, booked three weeks before travel
As industry journal The Company Dime reports, there are still several caveats in place, relating to the geographical scope of these changes, and what will happen to any funds from canceled tickets. However, the overall impact of these changes on corporate travel budgets could be significant. It will also be interesting to see how things change once travel begins to pick back up and inventory shrinks. American carriers made $2.8 billion in change fees in 2019, so without reneging on their promises, they will need to be creative in recouping this lost revenue.