SOME FEES MAY TAKE OFF
Airlines could cut ‘ridiculous’ ones,
Airline fees aren’t disappearing anytime soon, but the most ridiculous of them may be headed for the emergency exits.
By “ridiculous” I mean United Airlines’ $50 processing fee for tickets refunded to passengers after unplanned events such as jury duty, illness or death. Or Delta Air Lines’ $25 fee for booking a ticket by phone.
“Some of these fees were irrationally punitive,” says George Hoffer, a transportation economist at the University of Richmond. “They were neither costnor demand-based.”
They’ve been quietly eliminated in the last few weeks, and more could follow. But don’t get your hopes too high. Airlines and fees will continue to be synonymous for a while, unless the government gets involved.
Why are the outrageous fees vanishing? Because they were, well, outrageous. Often they had no relation to the cost of delivering air transportation — in other words, they were just junk fees forced on customers — and customers despised them. The latest Qualtrics Airline Pain Index suggests four out of five travelers are annoyed by these gratuitous surcharges.
Killing the fees is also a realistic move. “It’s a modest invest- ment they can afford to make in the context of big profits,” says Seth Kaplan, the editor of Airline
Weekly. “They couldn’t do it when a few cents here and there could make the difference between surviving or not.”
John Grant, a senior analyst for OAG, describes the recent moves as a “charm offensive” by the airlines, and he expects more of it ahead.
“Ultimately the possible fear of losing revenue by the traveler booking elsewhere — or, indeed, not traveling — has always been a slight concern,” he adds.
But let’s not kid ourselves. Taken together, fees like these are what made the airline industry profitable, so don’t expect them to all disappear overnight.
North America’s airlines raked in almost $11 billion in extra fees last year, up 24% from 2014. But it turns out they want to be profitable and be loved, too, and may- be you can have it both ways.
Then again, maybe not. Consider the change fee British Airways asked Samantha Sieverling, a student from Seattle, to pay when she tried to reroute her flight from Sofia, Bulgaria, back home. The reason for her change of heart? After the latest terrorist attacks, she wanted to avoid a stopover in Turkey.
To switch her itinerary, the airline demanded $275 plus a fare difference, which would have cost more than her original ticket.
Of course, British Airways would have probably resold her seat, collecting twice for the same seat. Ah, airline math. When observers survey the fee landscape, they see the debris of junk fees like Delta’s ticket charges and United’s refund charges. And then they behold the hulking mountain of confiscatory ticket change fees such as the one Sieverling was faced with. They say airlines can clean up the junk but if they really want the good will of their customers, they’ll also have to fix the change fees.
That’s easier said than done. U.S. airlines collected nearly $3 billion in change fees in 2014, the last year for which numbers are available. That’s a tall mountain, and a lot of goodwill. But there’s a strong will to force airlines to change. Southwest Airlines, which is consistently among the most profitable airlines, doesn’t charge any change fees, so there’s a sense that this junk fee could be cleared away.
Help might be on the way. Congress is considering a law that would force airlines to justify their change fees. Consumer advocates argue they wouldn’t be able to, and would effectively be forced to lower or eliminate them. Even if that law fails, there will be others, and advocacy groups like the National Consumers League have made it a priority to bring these loathed fees back down to earth.
Since this is America, there could be a market solution, too. A new airline called GLO launched late last year without baggage fees, no cost on food or beverage, and no seat choice fee.
“We didn’t think nickel-anddiming for something like bags was the way to go,” Trey Fayard, the airline’s founder, says. “After all, you are traveling. That means you have either been somewhere that wasn’t home or going back home - it’s pretty tough to not fly with a bag.”
GLO is a very small player, but if it’s successful, maybe the big airlines will follow. And if they don’t, maybe Congress will force them to do the right thing. They’ve already taken the first step.