Airline executives love to equate their tickets to concert or sports tickets.
“When you go to a concert, if you have a better seat, you expect to pay more,” United Airlines President Scott Kirby said in an interview explaining new fees to reserve seat assignments.
It’s an outlandish comparison, really, and a cover for restrictions on customers that would never fly in other industries. Sure, location matters and refunds aren’t allowed once you buy a ticket to a ballet performance or football game, just like they aren’t allowed for all but the most expensive commercial flights. But the similarities end there.
Unlike those events, airline tickets can’t be resold or given to someone else if you can’t use the ticket. Changes bring a $200 penalty. Event tickets have a price printed on them. The price of an airline seat varies wildly and fluctuates by the minute. And you don’t really buy a specific seat with an airline—you can be bumped or moved if the airline wants to.
Imagine showing up at a World Series game at Fenway Park and having the usher tell you the Red Sox gave your seat to someone else.
This faulty comparison airlines often make raises a fundamental question: What exactly is an airline ticket? You’re not buying a seat, you’re buying transportation—a contract to get you from one city to another as the airline wants. And the “ticket” comes with pages and pages of rules that work in the airline’s favor.
The most pernicious of those rules is the change fee, which airline executives admit isn’t to cover the minimal cost of altering a reservation but to discourage business travelers from buying cheap tickets and switching flights to fit their changing schedules. Same with restrictions on reselling tickets and changing names. They’re all to force corporate customers into higher fares.
The inflexibility has long grated on travelers, and leaves many wondering why airlines penalize their customers so aggressively.
“I can’t think of another business that charges for something that doesn’t seem to have value or seem to have a reason associated with it,” Jon Battle, a Dallas retiree, says of change fees. “Changing within the same airline? They’re still getting the business.”
Some ticket rules have loosened over time, airlines note, such as requirements for Saturday-night stays or round-trip ticket purchases. But others have grown into expensive consumer issues.
Reservation cancellation and change fees totaled $2.8 billion for U.S. airlines in the 12 months ending June 30, according to the Bureau of Transportation Statistics. They make up a big chunk of airline profits.
There have been a few recent efforts to make tickets more consumer-friendly, particularly with change fees, with little success so far.
Is That the Ticket?
How airline tickets are different from a ticket to the World Series:
- You can’t resell an airline ticket.
- You can’t give it to a friend.
- You could get moved to a worse seat.
- You could get bumped off the flight.
- Preflight safety briefing instead of national anthem.
- It’s usually much less fun.
A recent proposal in Congress to have the Transportation Department assess whether airline change fees are reasonable and proportionate to the service provided was removed from the final version of the Federal Aviation Administration reauthorization. Airlines lobbied against any possible limits, with American Airlines chief executive Doug Parker saying he’d eliminate any nonrefundable ticket changes if change fees were restricted.
“We, like the baseball team, like the opera, would say, ‘We’re sorry, it was nonrefundable,’ ” Parker said in September, according to the Associated Press. Yet unlike the baseball team or opera, the airline wouldn’t let you resell or give away a ticket.
One move that has stuck: Frontier Airlines slashed its $99 change fee last month. Now if you make a change 90 days or more before departure, Frontier won’t charge a change fee, but will collect any fare difference. Up to two weeks before departure a change costs an extra $49. Inside two weeks before departure, the fee remains at $99, plus fare differences.
United’s Mr. Kirby made his concert comparison when discussing new fees to reserve plain coach seats—with no extra legroom—that happen to be closer to the front of the plane. United announced in August it would start charging the fees for “preferred” seats by the end of the year. Other airlines, including American and Delta, do the same. Somehow being closer to the cockpit is, in airline thinking, like being in the orchestra section.
About all it really means is you deplane a couple of minutes earlier. The fees, on the other hand, force travelers, including families, to pay to reserve seats in advance. Fewer seats can be reserved for free. If you want seats together, you increasingly must pay fees.
Mr. Kirby acknowledges concerts aren’t a perfect analogy.
He says airlines need the rules and restrictions to separate leisure passengers, who are more price-sensitive and pay less, from business travelers, who are willing to pay more for seats booked closer to departure.
“For us, the same seat is a different product because of the flexibility inherent in being able to use that seat,” he says.
Were airlines to set a fixed price for seats and sell out the flight, the price for leisure customers would be about double, Mr. Kirby says.
“Everyone is better off with the structure we have in place,” he says.
If airlines allowed name changes on tickets, or let people sell or give tickets away like event tickets, speculators would buy up flights and push the cost higher. Online travel agencies might make a market in popular flights, or ticket-selling services like StubHub might get into the airline business.
“The policies are designed to effectively preserve the integrity of the pricing structure,” Mr. Kirby says. “The rationale for change fees is to keep those two things as distinct demand pools.”
With name changes, by the way, there is no security issue: TSA only wants the names of people on a flight hours before departure to be vetted against government databases. Name changes are allowed on group reservations at many airlines.
Southwest is the lone U.S. airline that doesn’t charge change fees and thinks it benefits with higher revenue by making life a little easier for travelers. Andrew Watterson, Southwest’s chief revenue officer, says passengers changing plans isn’t a problem as long as they realize they’re buying a new flight at a new price.
Adding a $200 change fee on top of a new fare, he suggests, is “gouging someone in their moment of need.”
Mr. Watterson contends ticket penalties are a relic of a bygone era when airlines couldn’t predict demand for each flight as accurately. Today, airlines have highly accurate flight-by-flight forecasts.
“Why should you penalize the customer,” he asks, “because we, as management, are doing a poor job?”
Write to Scott McCartney at email@example.com