United Airlines announced some significant changes today that will benefit customers. They call this a permanent move. Here are the changes:
- Effective immediately, United Airlines will no longer charge change fees on virtually all domestic tickets with the exception of Basic Economy. This is for all tickets, not just for elite members.
- On January 1, 2021 United will also eliminate standby fees for all passengers.
- United is also expanding free same-day changes. Now, Silver members will also be included in free same-day changes. You’ll still need to find the appropriate fare class or pay the difference in fare.
Here’s a video of United Airlines CEO Scott Kirby talking about the changes:
Scott Kirby says that United Airlines is the first of the legacy airlines to make such a change. He’s absolutely correct, though this is pretty much a carbon copy of what Southwest Airlines has done for as long as I can remember. Southwest Airlines doesn’t charge change fees, you’re just responsible for any change in fees.
This change by United Airlines seems to align with the current customer mix. There just isn’t really very much business travel demand. Leisure travel has seen some level of increase since the absolute bottom back in April. United Airlines has very much been a hub and spoke airline for quite some time. Up until recently, they avoided running point-to-point routes that served leisure customers, such as Boston to Orlando. That changed pretty drastically recently, with a sizable Florida expansion to cities that most definitely are not hubs for United.
United Airlines has been my primary airline for business travel for the past 4 or 5 years. From the perspective of a business traveler, these changes don’t make a huge difference to me. The only time I paid change fees were when it was necessary to get to a meeting sooner or when I had to get home for a sick child or other such personal matter. In those cases, the change fee wasn’t the barrier to making the change, especially since it was just for me and not my entire family of 4. Change fees hit families much harder, since they have to be paid by multiple folks when plans change.
Change fees are very annoying for leisure travelers and can be downright painful. However, they provide significant income for the airlines. That’s why when Scott Kirby says these fees are “permanently” gone, I hear a strategy that will continue until they believe the market will allow them to charge change fees again in the future.
The Final Two Pennies
I’ll be surprised if we fast forward 10 years and United Airlines isn’t charging change fees again. I don’t see them abandoning their model forever and adopting the Southwest approach. Rather, I see them trying to be more nimble and make changes that attract more customers. Right now, that means making them a more attractive choice than Southwest or Spirit Airlines for infrequent leisure travelers.
The legacy carriers have made a habit out of copying each other on major moves such as this, with Delta usually being the first to move. We’ve seen enough diversity in strategy since March between American, Delta and United. This is one time where I could actually see both American and Delta charting a different path as opposed to matching United on free changes. Time will tell…..
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