A trickle has turned into a torrent as major airlines announce the permanent elimination of change fees. Alaska Airlines announced today that it is permanently eliminating a $125 change fee on all but the most basic tickets, a move that follows United, American and Delta’s decisions to make permanent what many airlines had agreed to do temporarily as the COVID-19 lockdowns upended travel in the spring and early summer. Southwest Airlines was among the rare airlines not to charge a change fee, nor has it resorted to charging for all checked baggage. Most airlines are, however, expected to keep the numerous upcharges that have become part and parcel of a traveler’s life, including paying for premium seats in economy, seat choices and checked baggage.
According to reports, the change fees have been massively profitable for the airlines. Over the last decade, Delta has taken in $8.2 billion in change fees, with American scooping up nearly $7 billion and United collecting some $6.5 billion in the unpopular fees. (Which were typically on top of any change in the fares resulting from the change.)
These moves come as most airlines face an economic reckoning as the CARES Act support concludes at the end of this month and most of the larger carriers are telegraphing layoffs and additional furloughs. The normal late-summer fall-off in traffic has not yet happened—TSA “traveler throughput” figures have been flat since early July—but domestically the industry is running at just 27 percent of last year’s levels through the end of July.
Judging by the article’s last paragraph and what I saw when airlining from ATL, it will take a lot more than dropping hated airline fees and wearing masks to make more people feel safe enough to want to go through crowded terminals and stuffed airplanes and dealing with TSA to airline again.
I think what we are seeing industry wide is a structural change regarding 121 and 135. It is required to survive. Pricing will not be going down, they will be going up. It is inevitable.
I don’t think that hatred of air travel is the real issue. Demand is down because business travel is down. I had a vendor reach out to me the other day asking when was a good time to come visit the team here. I told him that there was no team to visit (at the office) because we’re all working from home.
The reasons business travelers travel just aren’t there right now.
It doesn’t matter how little the ticket costs or how pleasant the travel experience might be. Until people have a place to go, and a reason to go there, the airline industry won’t come back.
For the average “leisure” flyer it is, along with all of the unconstitutional restrictions the individual states have. Even the Disney parks are complaining about lack of business. Who wants to go on vacation to deal with all of that. As far as the business traveler, that was a profit maker for the airlines, not volume. All of my company’s airplane owners are business people and are just waiting for all the restrictions to go away, but still fly some. My company’s charter business has exploded with lots of new clients who are traveling, not wanting to have to deal with the airlines restrictions, including mask wearing on board. On my last trip that was the first question asked during boarding. All of the passengers removed theirs when I told them it their choice since both of us pilots do not while in the cockpit.
This story is putting the lie to the relief package in the first place. I suppose I sound like a broken record, but the virus cans should have been grounded in January. Having forced the grounding and allowing only flights approved to get people home, the government could justify checks to the airlines who would then have time to restructure or declare bankruptcy for when the checks were going to stop.
This is going to happen again, and the airlines, and other businesses, all need to be told now to plan for it to happen without any government aid except for compensation due when they are mandated to cease operation. The unions should stop worrying about petty crap, and start worrying about the airlines having funds put aside to help the employs.
Companies should be free to fail as long as they are free to operate. You cannot convince me that all the smart folks in finance cannot solve this problem instead of working on how to maximize all the free lunch opportunities they should stop getting.
Your compensation comment is an interesting one. As far as I know no small business has actually been compensated by the government for their business being shut down or closed permanently (or taken away)due to Covid restrictions. And that is another violation of the 5th amendment to the Constitution. I do agree with the statement on the last paragraph, as long as companies are actually allowed to operate.