Yesterday United Airlines delighted the flying public by announcing that it would eliminate change fees and standby fees on domestic flights. Airline change fees have historically been a major point of frustration among travelers, so this was incredible news. In particular, it’s amazing to see United leading here, rather than Delta.
While this announcement is great, in this post I wanted to focus on the aspect of this that’s leaving me scratching my head.
In this post:
This change is permanent and forever?!
We see airlines announce major changes all the time, both positive and negative (though usually there are more negative announcements than positive ones). However, rarely do airlines ever announce a change explicitly as being “permanent” and “forever.”
But that’s something that United emphasized the heck out of with yesterday’s announcement. The press release stated that these changes were permanent, while in a video message from United Airlines CEO Scott Kirby, he said that these changes were “forever.”
And that matches United’s messaging otherwise, including on social media, where the company is repeatedly mentioning that this change is forever. That’s right, F-o-r-e-v-e-r.
This is just so unusual for the airline industry. Even for policies that are intended to apply long-term, airlines almost never suggest something will be “forever.” Rather changes are permanent until the airline changes its mind, and then the changes aren’t permanent anymore.
Is the other shoe about to drop?
Several readers have said “uh oh, is there a negative announcement coming soon, because this seems too good to be true?”
I don’t think there’s a negative announcement coming soon. Right now airlines are in a dire situation, and consumers are in control. There’s no room for negative changes to be made.
In fairness, being skeptical here is logical, given the precedent. In the past positive changes at United have typically been followed pretty quickly by negative changes as well.
What’s United’s play here?
This is a great change, but I still can’t fully wrap my head around United’s marketing of this. Let me say that surely United Airlines doesn’t actually think this change is “forever,” in the sense that it will never change. Nothing in the airline industry has ever been forever. Nothing. Nada. Never.
Based on that, I have a few thoughts:
- The industry has at least a few tough years ahead, so the priority right now is scoring short term brownie points that reassure customers, and the airline can deal with the “forever” thing in the future. United Airlines might as well beat American and Delta to the punch here with this inevitable change.
- This question is for lawyers, because I don’t know the answer — could United at some point in the future be held liable if the company decides to bring back change fees in spite of promising it won’t happen? I don’t think so as long as they don’t retroactively change the terms you agree to when buying a ticket, but I’m also not sure.
- I think the most likely theory is that long-term this could simply be part of an overhauling of United’s fare structure. Basic Economy tickets aren’t permanently getting free changes, so I suspect we could eventually see the price differential between Basic Economy and regular economy increase.
I think that last point is the most likely explanation. For now United Airlines needs to offer flexibility due to all the uncertainty. And in the future if the industry fully recovers, United can simply increase the fare difference between Basic Economy and regular economy, marketing the latter as a product that comes with free changes.
Heck, in the future we could see United introduce several tiers of Basic Economy tickets, with “regular” economy tickets being closer to what refundable tickets were in the past. The point is, United could easily technically stay true to its promise by simply rebranding existing products, if it comes to that point.
Bottom line
United Airlines deserves credit for becoming the first US legacy airline to eliminate change fees on domestic tickets, which is a phenomenal development.
United insists that this change is “forever,” which isn’t typically how we see anything in the airline industry marketed. That’s very unusual, and one can’t help but wonder what United’s long-term plan is, once things recover.
If the airline did technically want to stay true to its promise, it could just expand Basic Economy fares and increase the fare difference between that and regular economy, I suppose.
What’s your take on United’s promise of forever?
@Daniel
It's not just a question of the virus.
Leisure travel has tanked *also* because of the high unemployment rate. Are those jobs coming back anytime soon? Weeeeeelll...
Meanwhile, over on the Business side, we've had months of travel reduction with little effect. Business travel has been revealed for what it's always been - a perk. How many corporate accountants are going to approve business travel in the future? (Yes, I know I'm about...
@Daniel
It's not just a question of the virus.
Leisure travel has tanked *also* because of the high unemployment rate. Are those jobs coming back anytime soon? Weeeeeelll...
Meanwhile, over on the Business side, we've had months of travel reduction with little effect. Business travel has been revealed for what it's always been - a perk. How many corporate accountants are going to approve business travel in the future? (Yes, I know I'm about to hear a chorus of, "Mine will!" But this is a small sample size, self-selected group. Is it typical over the overall market? Weeeellll...)
@Hal O'Brien
I think demand will be fully back (~2 million passengers per day) in 1.5 - 2 years. Probably Thanksgiving or Christmas 2021. I'm not buying the four year estimate or especially your 10 year one! I think we've seen how those with a decent amount of money are staying afloat pretty well. The stock market is doing just fine for example. The virus is unlikely to ever get as bad again as it...
@Hal O'Brien
I think demand will be fully back (~2 million passengers per day) in 1.5 - 2 years. Probably Thanksgiving or Christmas 2021. I'm not buying the four year estimate or especially your 10 year one! I think we've seen how those with a decent amount of money are staying afloat pretty well. The stock market is doing just fine for example. The virus is unlikely to ever get as bad again as it was in April, as even with the massive increase in cases in July we still haven't seen the same level of deaths as there were in April in the northeastern US (we are seeing nationwide about half the amount of deaths as in April per day, even though the cases spiked up to 70k or so).
Also, airlines know how much money they make in change fees per year. They will make up that loss by increasing bag fees a little bit (United is already ahead of the game here, as they have a $35 bag fee, whereas Delta/American/Alaska have a $30 fee), economy plus fee a little bit, and fares a bit too where they can.
* Demand has withered, and will probably not recover for 10 years or more (think Great Depression).
* There is an urgent need to get butts in seats.
* *Everybody* hates change fees, so much so that they're a barrier to getting butts in seats.
* OK, get rid of them. Forever, if need be. It's not like they generate as much revenue as tickets in the first place.
* If Basic Economy gets this,...
* Demand has withered, and will probably not recover for 10 years or more (think Great Depression).
* There is an urgent need to get butts in seats.
* *Everybody* hates change fees, so much so that they're a barrier to getting butts in seats.
* OK, get rid of them. Forever, if need be. It's not like they generate as much revenue as tickets in the first place.
* If Basic Economy gets this, and regular economy doesn't, that's probably a hat tip regular economy is going away.
Could be to level the playing field with WN, particularly in DEN, CHI, HOU. This leaves only bag fees which may be offset by the ability to get seat assignments.
"Change fees" might be gone "forever" but "alteration fees" are just around the corner.
Keep your eyes peeled for other ways United will make money. However these won't be implemented until planes are filling up again.
So I'll start receiving my promised "lifetime" annual two domestic confirmed upgrades (HK-50s) again?
@Ben (Lucky) et al.......Wake up people. Smell the coffee of Marketing SPIN SPIN SPIN. What one hand giveth, the other hand taketh away. That is the creed of almost every airline. I say almost. Kudos to those few still mostly honest.
Thanks. I think it is a great improvement but am also skeptical of the promise of “forever”. Nothing is forever except death and taxes.
What has not been addressed is whether the ticket your change to has to have the same departure and arrival cities or whether you can just apply the value of the ticket to a different itinerary. Assume the former?
@ Robin -- You can apply it towards any itinerary. It can be a different cabin, destination, etc. Just the traveler has to stay the same.
I hope hotel CEOs are paying attention, and get rid of the "destination fees" FOREVER!
There’s no risk in promising a permanent or forever change. United Airlines has its own version of the dictionary: what rational people consider a cancellation, United considers a schedule change. Offer lifetime Premier Executive status...but then change names, add a new tier (e.g., Premier Platinum), and map Executive to the new Premier Gold level, but with fewer benefits.
There are plenty of other ways to skirt this in the future too. Here’s an idea...
There’s no risk in promising a permanent or forever change. United Airlines has its own version of the dictionary: what rational people consider a cancellation, United considers a schedule change. Offer lifetime Premier Executive status...but then change names, add a new tier (e.g., Premier Platinum), and map Executive to the new Premier Gold level, but with fewer benefits.
There are plenty of other ways to skirt this in the future too. Here’s an idea worthy of Kirby: allow people to change flights or standby without a fee, but then deny the ability to carryover certain privileges and soft product to the new itinerary: no carryover or refund of premier access, paid upgrades, economy plus, or even the ability to earn PQFs, PQDs, or frequent flier miles. Then, offer a comfort-plus surcharge or subscription that allows customers the ability to buy back that which they paid for on their original itinerary. Progressively more generous exceptions will exist from general members through Global Services.
Also, base fares are dynamic and can change on a dime. I’m sure United can build an algorithm that alters fares on the fly in response to change and standby requests. The instant a change request is sought, new fares increase to guarantee that a small fare change results and new revenue is captured. Not a fee...just a new and higher fare that materialized just for you!
I, like many UA frequent flyers remember the "enhancements" to the MileagePlus program, blatant money grab (is it a frequent flyer program if you can simply buy a couple of flights and get 1K status?) and treatment of elites over the past few years. And I'm one of the few who spent my own money to get my 1K status. I'm not sure I will be able to trust UA again and will probably move to AA Exp instead.
Don't forget that United got rid of its $10K IDB compensation policy implemented in front of Congress after the Dr. Dao incident...
Sad to not get the tip of the hat on the f-o-r-e-v-e-r!! Haha
People are also not factoring in that you do not get a difference in fare as a credit. I am certain United has done the math and has calculated that this move will push more people to buy regular economy instead of basic economy, and the incremental increase in revenue, combined with the lack of credit for negative fare differentials, will more than offset the lost revenue of eliminating change fees.
Does this mean passengers can stand by for earlier flights to the same destination without having to pay a change fee if a seat on the earlier flight opens up?
As other commenters have already pointed out, one other shoe has already dropped. If the new fare is lower than the old fare, you now lose the residual value. This can be much more than the change fee if an expensive international ticket is being used to pay for a domestic ticket.
United is probably lying about "forever".
Most of this stuff is just word playing. Similar to lifetime status. Sure you will have some form of status but it usually ends up not being what you expected.
Maybe they've studied Southwest's model and figure it might be worth copying them?
A few years ago, Pizza Hut had a relentless ad campaign where you could get ANY PIZZA ANY CRUST ANY TOPPINGS FOR $10
They charged extra for stuffed crust and certain toppings because apparently "any" means "some" in the world of marketing.
Im sure United is playing the same games. Forever = the lifetime of the promotion.
The not-so-obvious drawback here is you can no longer reclaim the residual value of a ticket after changes. So if you book a $1000 fare, then change that to a $500 fare, previously you would pay the $200 change fee and get $300 as a credit. Now you will just end up with the cheaper fare and nothing else. With fares low right now, this probably won't be an issue for a while, but long term this could turn into an unfriendly policy for some high-value fliers.
I don't think there's a "forever" in the commercial airline industry. Too many things can change on a heart beat. I think airlines are rightfully so scared that business travel will never return to pre COVID levels as companies do the cost benefit analysis of travel versus a Video/Virtual call. Sure in person will always be a better experience but when the cost benefit analysis comes into play that dynamic changes, particularly if it involves...
I don't think there's a "forever" in the commercial airline industry. Too many things can change on a heart beat. I think airlines are rightfully so scared that business travel will never return to pre COVID levels as companies do the cost benefit analysis of travel versus a Video/Virtual call. Sure in person will always be a better experience but when the cost benefit analysis comes into play that dynamic changes, particularly if it involves long haul travel.
Ultimately airlines might need to turn more towards the leisure flyer to fill planes. It's also an incentive not to purchase BE fares, which won't be refundable/changeable.
@Ben I wonder if this change is because of the massive change inthe fare structure. For example, one week ago I booked a ticket to LAS that costs $394 in K class. I cancelled and rebooked it last night for $197. Same thing with TPA as it went from $357 to $157. Maybe the public outcry of drastically reduced ticket prices would be the catalyst? I also wonder, if like American, United is temporarily pivoting...
@Ben I wonder if this change is because of the massive change inthe fare structure. For example, one week ago I booked a ticket to LAS that costs $394 in K class. I cancelled and rebooked it last night for $197. Same thing with TPA as it went from $357 to $157. Maybe the public outcry of drastically reduced ticket prices would be the catalyst? I also wonder, if like American, United is temporarily pivoting from the business traveler to any traveler and this is part of it.
To be quite honest, I think this is a Hail Mary for the airline. Of the big 3, I believe United is in worse shape than DL or AA. They have their own headaches but I believe I read somewhere United has the least equity available and is the most damaged by closed borders. The longer closed borders continue, the least chance United has to really get a handle of things. Their lifeblood is international...
To be quite honest, I think this is a Hail Mary for the airline. Of the big 3, I believe United is in worse shape than DL or AA. They have their own headaches but I believe I read somewhere United has the least equity available and is the most damaged by closed borders. The longer closed borders continue, the least chance United has to really get a handle of things. Their lifeblood is international routes and it’s been completely severed. AA has incredible debt but as long as they can make payments it’s not an issue....it’s a huge drain on finances but doesn’t seem to be an issue at this particular moment (we will see long term). DL is crippled by offering middle seats but they believe it helps them long turn even though it’s severely cutting into what little profit airlines are making. I dunno....I feel for United but when you have to furlough FAs that were hired all the way back in 1999 and now doing this to get a ton of media attention, it seems like things are bleak. Not go out of business bleak but....bleak.
Over time, they can keep this "permanent" by adding feature bundles to basic economy tickets that include advance seats, additional FF benefits, bags, single-use change/cancel provisions, etc that will replace a significant portion of what are now lower-cost "standard economy" tickets.
In a recovered market, one can ultimately envision "standard economy" as the domain of business travelers, hard-core elites willing to pay to secure an upgrade chance, and the few leisure travelers willing to...
Over time, they can keep this "permanent" by adding feature bundles to basic economy tickets that include advance seats, additional FF benefits, bags, single-use change/cancel provisions, etc that will replace a significant portion of what are now lower-cost "standard economy" tickets.
In a recovered market, one can ultimately envision "standard economy" as the domain of business travelers, hard-core elites willing to pay to secure an upgrade chance, and the few leisure travelers willing to pay for the unlimited flexibility (lots of overlap in these groups).
United is trying to emphasize that this is intended as a permanent change, not a temporary C19 policy. If it helps to generate revenue, it will stay in place. If it doesn't, they'll change it again in a few years due to "unforseen changes in market conditions." Too much is being read into the "forever" verbiage.
You can change your tickets without any fees, so can United swap your nonstop to a connecting itinerary if planes aren’t “full”. Clearly not a customer-centric move.
When making a last-minute change say for example to leave a day later the change fee might be much cheaper than the fare difference. There will be cases where this new policy might be much more expensive for consumers. I don't think it's safe to say that this change will make it cheaper for everyone equally. I'm also old enough to remember the days when Pan Am made some amazing moves that simply put it out of business.
Isn't this the company that argued when changing lifetime status benefits that customers should have known that "lifetime" didn't mean "lifetime?" I doubt anyone would seriously consider this declaration of "forever" to have any legal value.
I think we are making too big a deal over this. It is a change in their business model going forward (which can be "permanently" changed again in the future). Timely and customer friendly.
For now, we just have an extension of the current policy/process through 31DEC. There will possibly be other changes to fare structure coming between now and when the new ticket exchange and standby policies are implemented on 01JAN--to me, the...
I think we are making too big a deal over this. It is a change in their business model going forward (which can be "permanently" changed again in the future). Timely and customer friendly.
For now, we just have an extension of the current policy/process through 31DEC. There will possibly be other changes to fare structure coming between now and when the new ticket exchange and standby policies are implemented on 01JAN--to me, the delay of the standby policy to that date suggests there are still other things in the works.
Whether this particular policy sticks or not (see AA "Value Pricing" ca. 1992), UA will work to recover the lost revenues its pricing model as demand recovers. While I don't see a return to the Saturday night stay requirement, there will be other revenue avenues to target less elastic demand...perhaps limiting complimentary upgrades to higher booking class codes, completely eliminating the deepest discount booking class codes from popular business travel times, etc.
We will definitely see continuned monetization of first class--that's a no brainer right now.
Future CEOs will be able to say that pre-bankruptcy promises are null. Additionally, the other shoe already dropped during the early pandemic when they gutted awards.
Is it possible that UA has done analysis and is confident that this change will actually lead to increased revenue, and thus is more confident with the 'forever'?
I'm unsure how good their internal data is, but if they reduce the total cost of changes (by eliminating the change fee but not the fare difference), will that lead to more passengers actually making changes. Add to that the fact that they will no longer refund...
Is it possible that UA has done analysis and is confident that this change will actually lead to increased revenue, and thus is more confident with the 'forever'?
I'm unsure how good their internal data is, but if they reduce the total cost of changes (by eliminating the change fee but not the fare difference), will that lead to more passengers actually making changes. Add to that the fact that they will no longer refund any residual amount, and perhaps this is a strategy to actually increase dollars in pocket... if so and they're confident in the math, that may support 'forever'.
I imagine they have calculated the average per ticket change fees customers pay and slowly they will increase the fare itself to include this amount. This would let them stick to the forever bit. Maybe?
on the point about basic economy Ben - all the fares I've been seeing basic and standard economy are very close (sometimes just $5) off on UA. AA has stopped offering basic on many of flights it seems. My feeling was that airlines don't need basic as only leisure travelers fly so the segmentation need isn't there? Have you noticed this trend?
lucky, united use of "forever" is like the use of "empty" flights. just as the flights they're cancelling aren't actually "empty," they won't be keeping this policy change "forever"
What is United play here? DESPERATION!!!! They are trying to get any gasp of air to stay alive. Whatever they can do to attract customer they will do. IF one day they leave life support this "forever" will have another meaning.
Didn’t AA promise they will never make less than $xx billion profit? Forever and never are terms that don’t age well in the aviation industry
One thing most people don’t realize is they’ll still have to pay difference in fare if they change their flights.
As far as ‘forever’ goes, it may very well be. I wouldn’t be surprised though if someday change fees come back but as a different name.
I treat the use of “forever” the same as the use of “#winning”...eye roll.
It’s indefinite...don’t make it out to be more than what it is.