Cha-Ching! Airlines Raking In Change And Cancellation Fees
We've got hidden fees, baggage fees, check-in fees, and whatever fees RyanAir is inventing this week. Now comes news that cancellation and change fees are also producing monster dough for airlines:
At some airlines, the fees are heavier than baggage fees even though they get far less attention. At AMR Corp.’s American Airlines, travelers paid $116 million in change and cancellation penalties in the first quarter this year, compared with only $108 million in baggage fees. 'It’s a back-door way of charging higher airfares to frequent fliers, particularly business travelers, who have to change plans,' said Paul Hudson of the Aviation Consumer Action Project. Change and cancellation fees amount to an added 3.2% of U.S. airline passenger revenue, totaling $527.6 million for the first quarter. Business travelers pay the lion’s share.
Major airlines have increased their penalties from $100 to $150, while LCC JetBlue has gone from $40 to $100. The change allowed JetBlue to bump up their first quarter fee revenue to $32.2 million, up 29% from last year. The article goes on to note that even Southwest, famous up until now for having no change fees at all, is considering tapping into that revenue stream.
It's not hard to imagine why this fee appeals to airlines; to the extent that it affects mainly business travelers, this is one kind of fee that doesn't leave the vast majority of travelers disgruntled. It's much easier to cope with a $150 penalty when it goes on the company credit card.
That said, there's something wrong when airlines are actively relying on opaque fees as a business model. It's not just change and cancellation fees of course. This is becoming a institutionalized tactic, so much so that there's now an entire sub-industry trying to calculate the real cost of an airline ticket. There was a time when the actual cost of a ticket was, you know, the actual cost of the ticket.
In any case, true story: it once cost a member of the Jaunted team $400 in transfer fees to fly from Rome to Boston. Your lesson for a Friday afternoon: never count on Italian public transportation to get you to Fiumicino in anything approaching "good time."
Related Stories:
· Your Bad Luck Is a Windfall For Airlines [WSJ]
· Airline Fees Coverage [Jaunted]
· Airlines Coverage [Jaunted]
[Photo: Wiki Commons / Kanchi1979]
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