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The Price of Consolidation: $200 Change Fees

The Price of Consolidation: $200 Change Fees

Last week, when United announced it was upping its ticket-change fees to $200 for domestic tickets, and to as much as $300 for international tickets, the pressing question was whether the other major airlines would match. Or so I thought.

As it turns out, the question wasn’t so much whether they’d match as when.

Within a few days, both Delta and US Airways had copied United’s move. And on Wednesday, American sealed deal, following the lead of the other full-service carriers.

Ladies and gentlemen, we have a new industry standard.

More significantly, we have a textbook example of how a consolidated industry can lead to consumer gouging.

United raised its fees to levels that were widely perceived to be completely disconnected from its costs. And despite the negative public response, within days the fees had been adopted by the handful of airlines carrying the great majority of U.S. travelers.

The only meaningful outlier among the largest U.S. airlines was Southwest, which, at least for now, still charges no fees to change a ticket. But while Southwest’s product and pricing practices are becoming increasingly mainstream, the airline is still enough of a hybrid that the full-service airlines feel safe in ignoring it. And they did.

Here’s the question. Would the mainline airlines have emulated United’s fee increase if, for example, Northwest and Continental were still flying? There’s no definitive answer to such a hypothetical, of course. But at the very least, we can say that the odds are much higher that one or more of the mainline carriers would have held the line against United. And that might well have been enough to dissuade other airlines from upping their fees.

Then, instead of the dominoes falling in United’s direction, they might have fallen the other way. And the industry-standard domestic change fee would still be $150, instead of $200.

As swift as the response was in this case, it will be swifter still when the American-US Airways merger reduces the number of mainline airlines from four to three — one fewer carrier to stand in the way of price increases and other consumer-unfriendly moves.

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  • http://twitter.com/Mileage_Update Mileage Update

    You can always change or cancel within 24 hours (American or United), also US Airways has the “Two Hour Rule”