No more airline change fees? After the turbulence of 2020, anything is possible

No more airline change fees? After the turbulence of 2020, anything is possible

TORONTO — Airlines are so much in survival mode right now that any discussion about fees seems downright absurd. Airlines are just trying to get passengers onto their planes amid a pandemic (plus, in Canada’s case, many layers of travel restrictions), never mind counting dollars earned from extra legroom or a meal upgrade.

And yet for the major U.S. carriers at least – Delta, American Airlines and United – the recent elimination of change fees for international flights is the canary in the coal mine, in a good way, says Jay Sorensen.

Sorensen is President – Product, Partnership and Marketing Practice of airline ancillary revenue consultancy IdeaWorksCompany, based in the U.S., which produces CarTrawler’s Ancillary Revenue Series with annual airline-by-airline reports.

“It’s a good indicator. Up until now they had been focusing almost completely on domestic. The airlines are saying, ‘international travel is coming back’,” says Sorensen.

What really stood out was Delta’s Dec. 9 announcement that it had permanently eliminated change fees for Delta tickets when flying from North America to anywhere in the world.

While the travel industry knows to take any announcement about the elimination of fees with a grain of salt – as Sorensen puts it, “in the airline industry, I think ‘permanently’ means about three years” – Delta’s move was nevertheless another sea change in a year that has been nothing but change.

Most airlines tacked expiry dates on the waived change fees amid the pandemic, or at least went the ‘until further notice’ route. Currently Air Canada’s flexible booking policy allows travellers to make a one-time change without a fee for all new or existing bookings made through Feb. 28, 2021 for original travel March 1, 2020 – February 28, 2022. For any ticket purchased currently, change fees are waived for any subsequent changes against that ticket, adds Air Canada spokesperson, Peter Fitzpatrick.

Asked if Air Canada would consider a move like Delta’s, Fitzpatrick said: “We always monitor industry trends in order to remain competitive but there is no update at this time.”

When an airline says it’s getting rid of a fee forever, what happens to that revenue stream?

Sorensen says that going forward, getting rid of a major revenue-generator like change fees would mean one of two things for an airline: those airlines may find themselves operating at an unhealthy level of profit, or they would need to find something to replace the lost revenue.

Like higher airfares? Most likely, says Sorensen. “Something has to give. For a long time consumers have benefitted from airfares that have been below where they could be,” says Sorensen. “Now things are in free-fall and consumers will be rewarded with lower than economic fares. There will be deals out there, but after a one-to-two year recovery period, airfares will rise, he says.

To read the full article, check out the Dec. 17 issue of Travelweek here.

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