This week, United, Delta, American and Alaska airlines each eliminated change fees from their domestic programs.  On the surface, this appears to be extremely good news for corporate travel programs, as the typical domestic change fee can be as much as $200 per ticket. However, there is clear room for review and consideration of how fee removal can also impact your program and budget management.

To assist our clients, this edition of TI Insights breaks down the fundamental components of what the removal of change fees means, and the potential implications to your program.

Key Points of the Programs
  • Change fee waivers were offered at the beginning of the pandemic as a good faith measure by the carriers to support business travel during height of flight cancellations.
  • United and Delta have confirmed this policy change as “permanent”, while American has stated the removal of change fees for the “foreseeable future”.
  • The fee removal is for domestic and some shorter international routes on all standard economy and premium class tickets. Basic Economy fares remain restricted and are not included in the removal of change fees.
  • When exchanging for a new ticket, if the new ticket fare is lower than the original ticket being exchanged, American and Delta will offer the remaining credit for future use. United confirms any residual will be forfeited.
  • This does not impact Southwest Airlines, as they have always maintained a no change fee policy.
How do You Benefit?
Advance Purchase:
With exchange fees removed, your travel policy could highly encourage or even mandate trip purchases well in advance of the trip date to take advantage of lower ticket prices.  Looking at domestic routes with a single stopover, booking 14-21 days in advance (compared to 5 days in advance) can save the traveler between 35%-65% of the full economy fare.

Fewer ‘Discarded’ Tickets:
Historically when making a ticket change, the cost of a change fee and the potential difference of fares could result in a much higher price than the initial ticket cost. According to the Bureau of Transportation’s, the average domestic ticket price for Q1, 2020 was $336.13. This makes the $200 fee change savings a considerable benefit, as it also decreases the number of discarded tickets simply being left unused.

What Risks does this Surface?
Unused Ticket Expiration Dates:
Although the change fee is no longer an issue, the expiration date for tickets to be reissued is still in place. Therefore, it is important that you manage the unused tickets available, prioritizing those that are closer to the expiration date over those that may have over a year prior to expiration. As a Travel Incorporated client, this prioritization continues to be part of our quality control, automated service for all bookings.  It is also important to manage the number of unused tickets in proportion to the ability to reclaim them as part of your ongoing budgeting process.

International Refundable Tickets:
International tickets are not included in the change fee waivers.  It is a best practice for international flights to be booked based upon the lowest logical rate, even though these tickets are likely non-refundable.  The logic is based upon the higher price point for fully refundable international ticket prices in comparison to the change fee for reissue. Currently, there are still waivers in place that cover international change fee waivers through the Covid booking periods.

Soft Dollar Funds:
For those clients with fairly significant market share, your preferred partnership may include soft dollar funds. These funds have historically been offered on a select basis to include the previous change fees, name change fees, and possible upgrades. With the removal of change fees, the airlines will need to consider new, equally interesting offers to maintain the perceived value.

Duty of Care Consideration:
In order to ensure a successful Duty of Care program, it is important for your travelers to know to reissue the tickets through Travel Incorporated, rather than through the airline directly.

Keeping an Eye on the Trends
It is clear that the airlines are willing to give up millions of dollars in fees to entice business and leisure travel back to the skies. But one thing that we can count on is that change will continue to occur and further adjustments will be made by the top US carriers.

Although the future isn’t clear, we do expect to see dynamic pricing and increased fares overall as demand starts to rise, with cautious expansion of routes.

Travel Incorporated is here to help you manage through today and tomorrow.  We will continue to keep our finger on the pulse of the industry and bring information to you, as you work towards managing your own return to travel.

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