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.
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Michael E says
A cynic here. Maybe they will not reverse in my lifetime. But I am no longer young. Forever? That’s a long time. Though I guess if everyone has it, the benefit to frequent users feels less special. But really it’s likely a win-win in most ways.
Oh, and to be fair, United has a much larger international footprint than Southwest. So the snarky 🙂 domestic only comparison is a little off the mark. :
Seth Miller says
I’m under no delusion that forever really means forever. Lifetime refers to the life of the program or the policy, not necessarily the company in so many things these days.
As for the difference in international footprint, sure, UA’s is much larger. But does that justify carving it out from the exemption?
Michael E says
I knew you doubted forever as much as I did. I just had to poke as two other travel blog sites left it un-poked. 🙂
Yes, I guess I think there is a difference on the international front. I am guessing the International pax footprint of United is maybe 50-100 times as large as Southwest, which is mostly or all local neighbors. The real moneymaker is international long haul, and UA can only give away much. Plus passenger list reporting requirements. Other complications in projecting loads on different flights. Plus on the same day standby front most passengers check bags internationally, so another layer of complication for them as nobody move from the plane their bags are loaded on.
Or that’s coming, but more publicity to add that later when meaningful numbers are considering flying internationally. I know few in my travel circle planning sooner than the world reopens.
TimH says
“United drops change fees. Forever.”
You mean “United drops change fees for all but the cheaper, bought well in advance tickets, that you and I buy for leisure trips. And will probably revert when the crisis is over because the revenue is pure profit.”
Seth Miller says
No, that’s not what I mean at all.
While Basic Economy is excluded from the new policy most advance purchase fares will still be covered.
As for when the fee comes back, I don’t really believe in forever as until the end of time and made that pretty clear in the story.