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Miamiairport
Posts: 575
Joined: Tue Apr 10, 2018 8:14 pm

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Wed Sep 19, 2018 10:22 pm

The company I work for charges clients the $200 when they cancel meetings last minute. They seem fine paying it. If the ticket suddenly became worthless I wonder if behaviors would change?

My sense is that this is the next thing coming.
 
AEROFAN
Posts: 1846
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Wed Sep 19, 2018 11:13 pm

Pellegrine wrote:
Domestic $200 change fees for regular pax (no status/cc) is highway robbery...about time Congress does something about it.


:checkmark: :checkmark: :checkmark: :checkmark:
“You are not entitled to your opinion. You are entitled to your informed opinion. No one is entitled to be ignorant.” ~Harlan Ellison~
 
MO11
Posts: 1404
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Wed Sep 19, 2018 11:38 pm

LAXBUR wrote:
Boof02671 wrote:
I think my mortgage interest rate is too high, Congress needs to pass a law making mortgages zero percent interest


Uh mortgages are highly regulated and the Federal Reserve helps set interest rates on mortgages.


What? Usury laws vary from state to state. Some states have no usury laws. There are no federal laws that specifically control mortgage interest rates. The 10-year treasury bond rate is just that. Acme Mortgage can charge what it wants.
 
rbavfan
Posts: 3574
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Wed Sep 19, 2018 11:56 pm

RushmoreAir wrote:
Change fees exist, not because they're a revenue source (although that is a nice bonus), but because they primarily serve as a disincentive for corporate/high willingness-to-pay customers to choose the lowest available fare class instead of buying up to a more flexible fare. Change fees work because they fence off the lower fares for early-booking leisure passengers who are OK with locking themselves into a time.

Now with (U)LCC competition, some markets have unrestricted fare structures anyway (so this no longer applies). However, in order to maintain the same average fare as today, airlines in markets with restricted or semi-restricted fare structures will no longer be able to sell the lowest priced fare for fear of buy-down from high WTP customers. More likely, you'll see airlines trying to invent new RM fences, such as a much greater price differential between basic economy and regular economy (encouraging business travelers to buy regular economy).



Nice but I bet a lot off people would appreciate knowing what WTP is. after all there are many on here that do not know all the internal terms.
 
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TheFlyingDisk
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Wed Sep 19, 2018 11:56 pm

Change fees should only be limited to the fare difference if any. I don't see any justification for tacking on the change fees since making the change isn't exactly hard to do.
I FLY KLM+ALASKA+QATAR+MALAYSIA+AIRASIA+MALINDO
 
RushmoreAir
Posts: 88
Joined: Mon Nov 14, 2011 4:29 am

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 12:15 am

rbavfan wrote:
RushmoreAir wrote:
Change fees exist, not because they're a revenue source (although that is a nice bonus), but because they primarily serve as a disincentive for corporate/high willingness-to-pay customers to choose the lowest available fare class instead of buying up to a more flexible fare. Change fees work because they fence off the lower fares for early-booking leisure passengers who are OK with locking themselves into a time.

Now with (U)LCC competition, some markets have unrestricted fare structures anyway (so this no longer applies). However, in order to maintain the same average fare as today, airlines in markets with restricted or semi-restricted fare structures will no longer be able to sell the lowest priced fare for fear of buy-down from high WTP customers. More likely, you'll see airlines trying to invent new RM fences, such as a much greater price differential between basic economy and regular economy (encouraging business travelers to buy regular economy).



Nice but I bet a lot off people would appreciate knowing what WTP is. after all there are many on here that do not know all the internal terms.



Sorry ... I referenced it earlier but didn't put the abbreviation in parentheses. WTP is willingness to pay: https://en.wikipedia.org/wiki/Willingness_to_pay
To further clarify, RM refers to revenue management (the practice of controlling seat availability at a certain price): https://en.wikipedia.org/wiki/Littlewood%27s_rule

If anyone is curious to learn more about airline economics and/or operations, this textbook is a great read (and very read-able for the layperson, just need to know some basic microeconomics). https://www.amazon.com/Global-Airline-I ... b_title_bk


TheFlyingDisk wrote:
Change fees should only be limited to the fare difference if any. I don't see any justification for tacking on the change fees since making the change isn't exactly hard to do.


The point isn't to charge because of the cost to provide the service, the point is to discourage changes/force those that need the flexibility to buy a higher priced flexible ticket. It's a similar concept to congestion tolling or a soda tax. It's about steering people towards the right fare class product, not the revenue. If there were more effective ways to sift out business travelers from leisure travelers, I'd love to hear anyone's ideas! Airlines have generally found change fees/flexibility and Saturday night/min stay requirements as the most effective way to price discriminate.

The main reason airlines need to price discriminate is that airline seats today are sadly a perishable, fungible commodity. Once an airline commits to operating a flight by loading it into the schedule, costs are largely fixed - aside from the relatively low marginal cost of fuel/peanuts for each additional pax. Unlike nearly every other product sold in the world, the people who need a flight most and are willing to pay the most are the people who show up last (last minute business travelers, etc.) The people willing to pay the least (leisure passengers) want to book first. Sell the entire plane out in advance at leisure fares, and you lose money even with a full flight. Hold back too many seats for last minute travelers, the plane goes out more than half empty (and still loses money). There's an entire branch of revenue management science that helps airlines optimize how many seats to hold back for last-minute, high fare customers, and how many to make available to leisure travelers in advance at a lower price. The trick is how to tell who's a business traveler and who's a leisure traveler.

If change fees were to be regulated away/capped too low, airlines would lose one of their most important ways to distinguish leisure passengers from business passengers. From experience, I would venture to say that the lowest available one-way fare on most routes (with sufficient advance purchase, etc.) is set below fully-allocated unit cost. Change fees and min stay requirements help preserve this fare for price sensitive leisure customers, leaving business travelers to pay a higher fare, dragging the average fare for the flight up, and allow airlines to (barely, these days) earn their cost of capital.

If change fees were capped or otherwise overregulated, the following would likely happen:

(1) More business/high willingness to pay (WTP) customers would end up purchasing the lowest available fare, since they have no incentive to do otherwise. Sales of high-priced tickets decline, and average fare temporarily drops.
(2) Lowest published fares would have to rise in order to maintain average segment fare, or airlines would start bleeding cash again. Given the relatively consolidated state of the industry, I'd bet that the former is more likely. $249 r/t LAX-JFK fares would be history.
(3) Airlines would need to invent new revenue management "fences" to help distinguish between low WTP and high WTP passengers. Sadly, this would likely involve making basic economy worse or main cabin way more expensive.
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The views and opinions as expressed in this post are entirely my own and are not those of my employer, Hawaiian Airlines, Inc
 
grbauc
Posts: 1469
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 1:13 am

lightsaber wrote:
Unintended consequences...

Every law passed with a cost has unintended consequences.

Air travel is perishable. If you don't fly, the seat (could) go empty. Change fees keep people from gaming the system.

Meh... You get what you pay for. Airlines are historically a money losing proposition. If any one airline overcharges, the lose market share.

Fly DL, UA, AA, NK, B6, AS, HA, WN or G4 as you desire. If there is a vacuum in the market, someone will find the answer.

I still remember $1,400 fares for coach do we want inflation adjusted back to that? I flew first class for less than that with my paid for dog!

Do stuff like the dog where I happily paid a profit for my carry-on.

Lightsaber


:bigthumbsup: :bigthumbsup: :bigthumbsup:

My fares are lower then 20 years ago when I started traveling for work. I buy my own tickets.Self employed contractor. I don't want government dictating business. The market has done that really good imop. I hate the $200 change fee but I've saved so much money over the years that the times I've had to change tickets don't come close. I know everyone has different situation.
 
jumbojet
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 1:22 am

VS11 wrote:
"Doing away with changes to nonrefundable fares would make airline flights more like baseball games or concerts, where customers aren’t typically reimbursed if they buy tickets and can’t use them. t.


United's very own Scott Kirby first mentioned that flying was a lot like attending a concert. The closer you get to the stage, the more the ticket costs so the closer you get to the front of the plane, the more it should cost. That was his way of trying to justify charging customers more for economy plus seats. Now, it seems that AA is using the same phraseology.

Hey Scott and Doug; WAKE UP AND SMELL THE ANGER IN PEOPLE. .People attend a concert or a sporting event because they enjoy it and they want to, thus they will pay more to sit closer to the front. People generally fly because they have to, NOT because they enjoy it. The airlines have already taken the FUN out of flying. So Scott and Doug, please STOP comparing seats in an airplane to that of attending a sporting event or concert. If I was your boss (which in a way I am) I would fire you for saying something so ridiculous.

I can only hope that Ed Bastian doesn't use the same analogy.
 
Yossarian22
Posts: 158
Joined: Wed Feb 21, 2018 7:25 am

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 1:28 am

RushmoreAir wrote:
rbavfan wrote:
RushmoreAir wrote:
Change fees exist, not because they're a revenue source (although that is a nice bonus), but because they primarily serve as a disincentive for corporate/high willingness-to-pay customers to choose the lowest available fare class instead of buying up to a more flexible fare. Change fees work because they fence off the lower fares for early-booking leisure passengers who are OK with locking themselves into a time.

Now with (U)LCC competition, some markets have unrestricted fare structures anyway (so this no longer applies). However, in order to maintain the same average fare as today, airlines in markets with restricted or semi-restricted fare structures will no longer be able to sell the lowest priced fare for fear of buy-down from high WTP customers. More likely, you'll see airlines trying to invent new RM fences, such as a much greater price differential between basic economy and regular economy (encouraging business travelers to buy regular economy).



Nice but I bet a lot off people would appreciate knowing what WTP is. after all there are many on here that do not know all the internal terms.



Sorry ... I referenced it earlier but didn't put the abbreviation in parentheses. WTP is willingness to pay: https://en.wikipedia.org/wiki/Willingness_to_pay
To further clarify, RM refers to revenue management (the practice of controlling seat availability at a certain price): https://en.wikipedia.org/wiki/Littlewood%27s_rule

If anyone is curious to learn more about airline economics and/or operations, this textbook is a great read (and very read-able for the layperson, just need to know some basic microeconomics). https://www.amazon.com/Global-Airline-I ... b_title_bk


TheFlyingDisk wrote:
Change fees should only be limited to the fare difference if any. I don't see any justification for tacking on the change fees since making the change isn't exactly hard to do.


The point isn't to charge because of the cost to provide the service, the point is to discourage changes/force those that need the flexibility to buy a higher priced flexible ticket. It's a similar concept to congestion tolling or a soda tax. It's about steering people towards the right fare class product, not the revenue. If there were more effective ways to sift out business travelers from leisure travelers, I'd love to hear anyone's ideas! Airlines have generally found change fees/flexibility and Saturday night/min stay requirements as the most effective way to price discriminate.

The main reason airlines need to price discriminate is that airline seats today are sadly a perishable, fungible commodity. Once an airline commits to operating a flight by loading it into the schedule, costs are largely fixed - aside from the relatively low marginal cost of fuel/peanuts for each additional pax. Unlike nearly every other product sold in the world, the people who need a flight most and are willing to pay the most are the people who show up last (last minute business travelers, etc.) The people willing to pay the least (leisure passengers) want to book first. Sell the entire plane out in advance at leisure fares, and you lose money even with a full flight. Hold back too many seats for last minute travelers, the plane goes out more than half empty (and still loses money). There's an entire branch of revenue management science that helps airlines optimize how many seats to hold back for last-minute, high fare customers, and how many to make available to leisure travelers in advance at a lower price. The trick is how to tell who's a business traveler and who's a leisure traveler.

If change fees were to be regulated away/capped too low, airlines would lose one of their most important ways to distinguish leisure passengers from business passengers. From experience, I would venture to say that the lowest available one-way fare on most routes (with sufficient advance purchase, etc.) is set below fully-allocated unit cost. Change fees and min stay requirements help preserve this fare for price sensitive leisure customers, leaving business travelers to pay a higher fare, dragging the average fare for the flight up, and allow airlines to (barely, these days) earn their cost of capital.

If change fees were capped or otherwise overregulated, the following would likely happen:

(1) More business/high willingness to pay (WTP) customers would end up purchasing the lowest available fare, since they have no incentive to do otherwise. Sales of high-priced tickets decline, and average fare temporarily drops.
(2) Lowest published fares would have to rise in order to maintain average segment fare, or airlines would start bleeding cash again. Given the relatively consolidated state of the industry, I'd bet that the former is more likely. $249 r/t LAX-JFK fares would be history.
(3) Airlines would need to invent new revenue management "fences" to help distinguish between low WTP and high WTP passengers. Sadly, this would likely involve making basic economy worse or main cabin way more expensive.


Buying refundable tickets is a bad deal. I just checked at aa.com, a main cabin ticket from ORD to JFK one way for a random date in October, $140, A refundable ticket is $440, there is little sense in paying $300 to insure a $140 ticket.

On the other hand, I also checked AirAsia for a random October flight from KMG to KUL, base fare of $65 USD, for an additional $75 I can buy a ticket that includes checked luggage, priority seating, more leg room, a hot meal, insurance that my flight will be on time, and the right to make free changes to my travel plans.

If they sold packages like that with reasonable increases I might have more sympathy for the carrier. But, who pays a $300 premium to avoid a $200 fee on a $140 ticket?
 
airzona11
Posts: 1741
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 1:29 am

grbauc wrote:
lightsaber wrote:
Unintended consequences...

Every law passed with a cost has unintended consequences.

Air travel is perishable. If you don't fly, the seat (could) go empty. Change fees keep people from gaming the system.

Meh... You get what you pay for. Airlines are historically a money losing proposition. If any one airline overcharges, the lose market share.

Fly DL, UA, AA, NK, B6, AS, HA, WN or G4 as you desire. If there is a vacuum in the market, someone will find the answer.

I still remember $1,400 fares for coach do we want inflation adjusted back to that? I flew first class for less than that with my paid for dog!

Do stuff like the dog where I happily paid a profit for my carry-on.

Lightsaber


:bigthumbsup: :bigthumbsup: :bigthumbsup:

My fares are lower then 20 years ago when I started traveling for work. I buy my own tickets.Self employed contractor. I don't want government dictating business. The market has done that really good imop. I hate the $200 change fee but I've saved so much money over the years that the times I've had to change tickets don't come close. I know everyone has different situation.


The government is very much already dictating the airline business. The government allowing mergers and backstopping the chapter 11 BK filing of airlines is the reason AA (and others) were allowed to shed their debt obligations resulting from losses of poor business practices in the past and merge their way to current proftiabily. They are already playing a dangerous game unbundling their fares, the ancillary fees are not taxed the same way, the government wants their money. AA and other airlines benefit from government protection on no foreign competition on local routes and lobby to keep the ME3 out. The government is very much involved with the airline business. Full disclosure, I think that is not a good thing, but government has played a massive role in shaping AA as it stands today.
 
phlswaflyer
Posts: 90
Joined: Sat Oct 19, 2013 9:02 pm

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 1:38 am

usflyer msp wrote:
phlswaflyer wrote:
Parker cares about Parker. Kirby cares about Kirby. They both come from the same school of " how much can we screw our customers and make ourselves rich..?" There is not and never has been a rationale for a ticket change fee and one as high as $200. Never. Ever. They will sell every seat because they are reducing flights and frequency so they do NOT lose a stinking cent. Southwest makes plenty of money, runs a MUCH better shop and people like to fly them.


How is a very clearly disclosed fee for a service "screwing the customers"? If you dont like the terms of the fare you are free to purchase a different fare that meets your needs. I tire of populist rants like this; the public has no right to cheap plane tickets with no restrictions.


Gee, I get tired of condescending " know it alls who rant with their armchair knowledge. Saying its disclosed does make it right, fair or means it makes sense. Two different issues. The $200 change fee is a pure greed and profit play. It's screwing and gouging at its finest. Yes, its disclosed. Whoo Hoo. So what?
 
RushmoreAir
Posts: 88
Joined: Mon Nov 14, 2011 4:29 am

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 1:40 am

Yossarian22 wrote:

Buying refundable tickets is a bad deal. I just checked at aa.com, a main cabin ticket from ORD to JFK one way for a random date in October, $140, A refundable ticket is $440, there is little sense in paying $300 to insure a $140 ticket.

On the other hand, I also checked AirAsia for a random October flight from KMG to KUL, base fare of $65 USD, for an additional $75 I can buy a ticket that includes checked luggage, priority seating, more leg room, a hot meal, insurance that my flight will be on time, and the right to make free changes to my travel plans.

If they sold packages like that with reasonable increases I might have more sympathy for the carrier. But, who pays a $300 premium to avoid a $200 fee on a $140 ticket?


Many business travelers might need to make multiple changes to a ticket. If expensing travel directly to a client, a change fee or two might look bad no matter how justifiable, vs. no one would look too hard at buying a flexible ticket. Many organizations also prohibit buying non-refundable tickets for their business travelers as a matter of policy (I worked for one).

As to your AirAsia example, their average reported Flight Attendant pay is $240 USD/month. If you want to bring poverty wages to the US airline industry, sure we can get you a $65 ticket. Crew costs hover around just under a third of US airlines' operating costs, so slashing those would go a long way towards reducing ticket costs. Though I don't think anyone would argue we could (or should) match AirAsia's wages.

https://www.glassdoor.com/Salary/AirAsi ... _IN170.htm
Last edited by RushmoreAir on Thu Sep 20, 2018 1:43 am, edited 1 time in total.
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The views and opinions as expressed in this post are entirely my own and are not those of my employer, Hawaiian Airlines, Inc
 
phlswaflyer
Posts: 90
Joined: Sat Oct 19, 2013 9:02 pm

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 1:42 am

kiowa wrote:
phlswaflyer wrote:
Parker cares about Parker. Kirby cares about Kirby. They both come from the same school of " how much can we screw our customers and make ourselves rich..?" There is not and never has been a rationale for a ticket change fee and one as high as $200. Never. Ever. They will sell every seat because they are reducing flights and frequency so they do NOT lose a stinking cent. Southwest makes plenty of money, runs a MUCH better shop and people like to fly them.


And yet there are those of us who think Southwest is a far inferior airline and refuse to fly them.


Whatever - not my point. You have an ax to grind against SW - go for it. They make a profit and don't charge fees. That's my point.
 
Yossarian22
Posts: 158
Joined: Wed Feb 21, 2018 7:25 am

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 1:52 am

RushmoreAir wrote:
Yossarian22 wrote:

Buying refundable tickets is a bad deal. I just checked at aa.com, a main cabin ticket from ORD to JFK one way for a random date in October, $140, A refundable ticket is $440, there is little sense in paying $300 to insure a $140 ticket.

On the other hand, I also checked AirAsia for a random October flight from KMG to KUL, base fare of $65 USD, for an additional $75 I can buy a ticket that includes checked luggage, priority seating, more leg room, a hot meal, insurance that my flight will be on time, and the right to make free changes to my travel plans.

If they sold packages like that with reasonable increases I might have more sympathy for the carrier. But, who pays a $300 premium to avoid a $200 fee on a $140 ticket?


Many business travelers might need to make multiple changes to a ticket. If expensing travel directly to a client, a change fee or two might look bad no matter how justifiable, vs. no one would look too hard at buying a flexible ticket. Many organizations also prohibit buying non-refundable tickets for their business travelers as a matter of policy (I worked for one).

As to your AirAsia example, their average reported Flight Attendant pay is $240 USD/month. If you want to bring poverty wages to the US airline industry, sure we can get you a $65 ticket. Crew costs hover around just under a third of US airlines' operating costs, so slashing those would go a long way towards reducing ticket costs. Though I don't think anyone would argue we could (or should) match AirAsia's wages.

https://www.glassdoor.com/Salary/AirAsi ... _IN170.htm

The point isn’t the base fair of $65. The point is that a ticket with less restrictions that also includes baggage and other things is a little more than a 100% mark up, for AA a ticket that does not include baggage or more comfortable seats, just the right to cancel/change is a 250ish% markup.

I get that 4 hour flights for $65 aren’t possible in the U.S. economic environment.
 
RushmoreAir
Posts: 88
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 2:07 am

Yossarian22 wrote:
The point isn’t the base fair of $65. The point is that a ticket with less restrictions that also includes baggage and other things is a little more than a 100% mark up, for AA a ticket that does not include baggage or more comfortable seats, just the right to cancel/change is a 250ish% markup.

I get that 4 hour flights for $65 aren’t possible in the U.S. economic environment.


That $140 fare is a $120 base, probably fare basis code SUAIZNM1, which also carries a 14 day advance purchase restriction, whereas the $440 flexible fare - basis code K0AJZRN1 - is theoretically a walk-up fare. Not that I necessarily agree that this method makes sense, but in the economic modeling world you would associate a disutility with the change fee restriction (maybe valued at $160 or something for a business traveler with an 80% chance of changing before departure in this example), then an additional disutility with the A/P restriction (let's say $150 for example). A theoretically logical passenger with those disutilities would choose the lowest sum of price + disutility, which in this case would be $140 tix + $160 change disutility + $150 A/P disutility = $450 for the "cheap" ticket, and $440 for the flexible ticket.

When I first saw this reasoning, I totally agree that it didn't make sense to me. Then I saw how many people really do just purchase last minute tickets or purchase flexible tickets on an expense account "because they can", and now I get it.
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RWA380
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 3:24 am

FA9295 wrote:
jplatts wrote:
AA has its ORD, DFW, LAX, MIA, PHX, and DCA hubs in markets where WN has focus city airports, and AA faces significant competition from WN on domestic air travel in the Chicago, Dallas/Fort Worth, Greater Los Angeles, Miami/Fort Lauderdale, Phoenix, and Baltimore/Washington markets. AA will have to worry about losing market share and business to WN in these 6 markets if it institutes a policy of no ticket changes on non-refundable fare tickets.

Eh, but AA can also connect people onward to Asia, Europe and South America, which WN cannot do.


The lions share of US traffic is domestic, a much larger market than International & WN already heads south from the US & now Hawaii, that's how they are the size they are, largest domestic carrier. WN can obviously attract customers with no bag fees, because that is the number one reason I hear from people who fly them & can do it offering competitive fares & while making tons of money.
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Pellegrine
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 3:43 am

TheFlyingDisk wrote:
Change fees should only be limited to the fare difference if any. I don't see any justification for tacking on the change fees since making the change isn't exactly hard to do.


$20-60 for a change fee + the fare difference should be reasonable. $200-500 is not.

The people making comparisons to thinks like doctor's visits or professional meetings aren't apt. The airline is not LOSING potential revenue because the passenger does not show up and they could have sold the seat to a 2nd person...they kept the first person's fare...
We fly JETS, we don't fly donkeys.
 
phlswaflyer
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 8:21 am

As long as Parker is paid based on stock price......try paying him on customer satisfaction rankings and other such measures.

Fees took hold as a way to offset rapidly rising oil prices. When those stabilized, AA and others decided they liked the fees - it made the stock price better and CEO pay is now at an all-time high. Saying SW fees are at an advantage due to their fuel hedging - well that argument ended years ago. They are not cheaper and in every single case I have taken the time to compare are the same as the legacy carriers. Yet, they make a profit.

These fees are out of control - disclosed or not - and show no sign of abating. It is another sign that the overall airline model is and has been broken for years.

To those who say "SW is like a bus with wings", - every airline is squeezing more and more into less space ( witness the AA 737 mods). Isom, is as bad as Parker.

I have to fly AA because of schedules and flight availability. If AA took a lesson from SW on things like boarding, nice flight attendants, culture and a host of other things, **maybe** I could stomach some of fees. As it stands, AA/UA gouge you and then treats you like crap in a seat and cabin essentially the same as everyone elses.
 
axiom
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 10:06 am

Yossarian22 wrote:
RushmoreAir wrote:
rbavfan wrote:


Nice but I bet a lot off people would appreciate knowing what WTP is. after all there are many on here that do not know all the internal terms.



Sorry ... I referenced it earlier but didn't put the abbreviation in parentheses. WTP is willingness to pay: https://en.wikipedia.org/wiki/Willingness_to_pay
To further clarify, RM refers to revenue management (the practice of controlling seat availability at a certain price): https://en.wikipedia.org/wiki/Littlewood%27s_rule

If anyone is curious to learn more about airline economics and/or operations, this textbook is a great read (and very read-able for the layperson, just need to know some basic microeconomics). https://www.amazon.com/Global-Airline-I ... b_title_bk


TheFlyingDisk wrote:
Change fees should only be limited to the fare difference if any. I don't see any justification for tacking on the change fees since making the change isn't exactly hard to do.


The point isn't to charge because of the cost to provide the service, the point is to discourage changes/force those that need the flexibility to buy a higher priced flexible ticket. It's a similar concept to congestion tolling or a soda tax. It's about steering people towards the right fare class product, not the revenue. If there were more effective ways to sift out business travelers from leisure travelers, I'd love to hear anyone's ideas! Airlines have generally found change fees/flexibility and Saturday night/min stay requirements as the most effective way to price discriminate.

The main reason airlines need to price discriminate is that airline seats today are sadly a perishable, fungible commodity. Once an airline commits to operating a flight by loading it into the schedule, costs are largely fixed - aside from the relatively low marginal cost of fuel/peanuts for each additional pax. Unlike nearly every other product sold in the world, the people who need a flight most and are willing to pay the most are the people who show up last (last minute business travelers, etc.) The people willing to pay the least (leisure passengers) want to book first. Sell the entire plane out in advance at leisure fares, and you lose money even with a full flight. Hold back too many seats for last minute travelers, the plane goes out more than half empty (and still loses money). There's an entire branch of revenue management science that helps airlines optimize how many seats to hold back for last-minute, high fare customers, and how many to make available to leisure travelers in advance at a lower price. The trick is how to tell who's a business traveler and who's a leisure traveler.

If change fees were to be regulated away/capped too low, airlines would lose one of their most important ways to distinguish leisure passengers from business passengers. From experience, I would venture to say that the lowest available one-way fare on most routes (with sufficient advance purchase, etc.) is set below fully-allocated unit cost. Change fees and min stay requirements help preserve this fare for price sensitive leisure customers, leaving business travelers to pay a higher fare, dragging the average fare for the flight up, and allow airlines to (barely, these days) earn their cost of capital.

If change fees were capped or otherwise overregulated, the following would likely happen:

(1) More business/high willingness to pay (WTP) customers would end up purchasing the lowest available fare, since they have no incentive to do otherwise. Sales of high-priced tickets decline, and average fare temporarily drops.
(2) Lowest published fares would have to rise in order to maintain average segment fare, or airlines would start bleeding cash again. Given the relatively consolidated state of the industry, I'd bet that the former is more likely. $249 r/t LAX-JFK fares would be history.
(3) Airlines would need to invent new revenue management "fences" to help distinguish between low WTP and high WTP passengers. Sadly, this would likely involve making basic economy worse or main cabin way more expensive.


Buying refundable tickets is a bad deal. I just checked at aa.com, a main cabin ticket from ORD to JFK one way for a random date in October, $140, A refundable ticket is $440, there is little sense in paying $300 to insure a $140 ticket.

On the other hand, I also checked AirAsia for a random October flight from KMG to KUL, base fare of $65 USD, for an additional $75 I can buy a ticket that includes checked luggage, priority seating, more leg room, a hot meal, insurance that my flight will be on time, and the right to make free changes to my travel plans.

If they sold packages like that with reasonable increases I might have more sympathy for the carrier. But, who pays a $300 premium to avoid a $200 fee on a $140 ticket?


I am sympathetic to the internal RM discussion -- and thanks to posters like RushmoreAir for the thoughtful discussion -- but at the end of the day, this is also how I feel as a consumer. 100%.

I would be much more amenable to paying a fare difference, plus a fair overhead cost (ie cost of the time of staff to make the ticket change). I cannot reckon $200 could ever be a fair overhead cost.
 
xdlx
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 11:43 am

Any bill in congress should consider that the realities of 21st century. Airlines should NOT be Overbooking flights. This practice has been used with the excuse to "maximize revenue" and utilizing the logic that folks do change plans and this is the way to avoid spoilage. However this excuse, only applied in the days where you had a paper ticket to EXCHANGE for your seat, the airline needed the paper ticket to collect the fare. Now days with e-tickets the funds are in the company bank at the moment the ticket is purchased. OVERBOOKING IS A PRACTICE that is very 20th century and its USEFUL purpose is well past us. It creates unnecesary stress to the entire system of CI and processing a flight. Airports should be in the business of ENHANCING the EXPERIENCE not make it more like a 'cattle call'.
 
Yossarian22
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 12:43 pm

xdlx wrote:
Any bill in congress should consider that the realities of 21st century. Airlines should NOT be Overbooking flights. This practice has been used with the excuse to "maximize revenue" and utilizing the logic that folks do change plans and this is the way to avoid spoilage. However this excuse, only applied in the days where you had a paper ticket to EXCHANGE for your seat, the airline needed the paper ticket to collect the fare. Now days with e-tickets the funds are in the company bank at the moment the ticket is purchased. OVERBOOKING IS A PRACTICE that is very 20th century and its USEFUL purpose is well past us. It creates unnecesary stress to the entire system of CI and processing a flight. Airports should be in the business of ENHANCING the EXPERIENCE not make it more like a 'cattle call'.


I mean, things happen. Airlines operate planes of many different sizes, that can cause overbooking. Also, weather can cause overbooking as unexpected headwinds could force the airline to leave passengers behind. Also, with mixed connections and no shows, it probably isn’t unusual for problems to work themselves out.
 
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vhtje
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 12:50 pm

EA CO AS wrote:
phxa340 wrote:
This is a product of Airlines own greed. When they fee the public to death, government tends to listen to their constituents.


Actually, it's a product of consumers being driven by the desire for low fares. The main reason for the existence of change fees is to keep customers from changing their tickets in the first place. If airlines could be guaranteed that purchasers would never, ever change, the fares at the top end would come down, but the fares on the low end would go up somewhat. The higher-end fares are high precisely because they DO permit flexibility like refunds or changes without a fee, whereas the trade-off on a low-end, discounted fare is that you can't get your money back, and changing the ticket requires a fee.

Don't like the fees? Then prepare for higher prices.


I do not completely buy your argument. I do understand your point: if customers were free to change their plans it would cause havoc for airline planning. Airlines need some degree of certainty in order to schedule aircraft; if customers could change at the last minute without consequence then this becomes impossible for the airline. I do understand that.

But timing is what kills your argument. What difference does it make to an airline if I move from the 11:30 flight to the 14:30 flight, three months out from departure? It can be hard for me to know at booking six months out from travelling exactly what I will be doing on that day, but airlines expect me to lock myself in. (The kicker is, of course, airlines can change their schedule at no penalty for inconveniencing me, but that is a different argument for another time).

To your point: any legislative changes made that effect booking fee policy cannot result in havoc for airline and aircraft scheduling. The solution might be to introduce a sliding scale of change fees, that get more expensive the closer to the departure point. So that changes in date/flight are free anytime from booking to up to 3 months from departure date, $50 two months from departure date, $100 one month from departure date and $200 between one month and one days from departure. Changes would not permitted within 24 hours of departure.

On the other hand, as others have pointed out, Southwest allow changes without fees, and it does not seem to adversely affect their scheduling. Do we have any data on how frequently bookings are changed on Southwest and how close to departure these changes occur? I note Southwest do charge fare differences, so if a passenger changes their flight they have to pay any difference in fare. Presumably the closer to the flight date, the higher the fare difference. Is higher fares closer to departure enough to act as a disincentive to changing the flight too close to the the booked departure, thus avoiding scheduling headaches for airlines?
I only turn left when boarding aircraft. Well, mostly. All right, sometimes. OH OKAY - rarely.
 
hohd
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 1:44 pm

Change fees should be based on %of fare paid, may be about 25% with a cap of 200, then it would it worthwhile for a passenger to change their tickets on a 300 to 400 fare or allow name changes on the tickets.
 
Bald1983
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 1:50 pm

TheFlyingDisk wrote:
Change fees should only be limited to the fare difference if any. I don't see any justification for tacking on the change fees since making the change isn't exactly hard to do.


Simple, if you do not want change fees, do not buy non-refundable tickets.
 
Yossarian22
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 1:51 pm

vhtje wrote:
EA CO AS wrote:
phxa340 wrote:
This is a product of Airlines own greed. When they fee the public to death, government tends to listen to their constituents.


Actually, it's a product of consumers being driven by the desire for low fares. The main reason for the existence of change fees is to keep customers from changing their tickets in the first place. If airlines could be guaranteed that purchasers would never, ever change, the fares at the top end would come down, but the fares on the low end would go up somewhat. The higher-end fares are high precisely because they DO permit flexibility like refunds or changes without a fee, whereas the trade-off on a low-end, discounted fare is that you can't get your money back, and changing the ticket requires a fee.

Don't like the fees? Then prepare for higher prices.


I do not completely buy your argument. I do understand your point: if customers were free to change their plans it would cause havoc for airline planning. Airlines need some degree of certainty in order to schedule aircraft; if customers could change at the last minute without consequence then this becomes impossible for the airline. I do understand that.

But timing is what kills your argument. What difference does it make to an airline if I move from the 11:30 flight to the 14:30 flight, three months out from departure? It can be hard for me to know at booking six months out from travelling exactly what I will be doing on that day, but airlines expect me to lock myself in. (The kicker is, of course, airlines can change their schedule at no penalty for inconveniencing me, but that is a different argument for another time).

To your point: any legislative changes made that effect booking fee policy cannot result in havoc for airline and aircraft scheduling. The solution might be to introduce a sliding scale of change fees, that get more expensive the closer to the departure point. So that changes in date/flight are free anytime from booking to up to 3 months from departure date, $50 two months from departure date, $100 one month from departure date and $200 between one month and one days from departure. Changes would not permitted within 24 hours of departure.

On the other hand, as others have pointed out, Southwest allow changes without fees, and it does not seem to adversely affect their scheduling. Do we have any data on how frequently bookings are changed on Southwest and how close to departure these changes occur? I note Southwest do charge fare differences, so if a passenger changes their flight they have to pay any difference in fare. Presumably the closer to the flight date, the higher the fare difference. Is higher fares closer to departure enough to act as a disincentive to changing the flight too close to the the booked departure, thus avoiding scheduling headaches for airlines?


A scale based on time before departure is not unusual in Asia. My wife and I had a Hainan flight that was refundable with a fee and changeable with a fee, but those fees increased within either 48 or 72 hours of scheduled departure.
 
Bald1983
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 1:53 pm

RushmoreAir wrote:
rbavfan wrote:
RushmoreAir wrote:
Change fees exist, not because they're a revenue source (although that is a nice bonus), but because they primarily serve as a disincentive for corporate/high willingness-to-pay customers to choose the lowest available fare class instead of buying up to a more flexible fare. Change fees work because they fence off the lower fares for early-booking leisure passengers who are OK with locking themselves into a time.

Now with (U)LCC competition, some markets have unrestricted fare structures anyway (so this no longer applies). However, in order to maintain the same average fare as today, airlines in markets with restricted or semi-restricted fare structures will no longer be able to sell the lowest priced fare for fear of buy-down from high WTP customers. More likely, you'll see airlines trying to invent new RM fences, such as a much greater price differential between basic economy and regular economy (encouraging business travelers to buy regular economy).



Nice but I bet a lot off people would appreciate knowing what WTP is. after all there are many on here that do not know all the internal terms.



Sorry ... I referenced it earlier but didn't put the abbreviation in parentheses. WTP is willingness to pay: https://en.wikipedia.org/wiki/Willingness_to_pay
To further clarify, RM refers to revenue management (the practice of controlling seat availability at a certain price): https://en.wikipedia.org/wiki/Littlewood%27s_rule

If anyone is curious to learn more about airline economics and/or operations, this textbook is a great read (and very read-able for the layperson, just need to know some basic microeconomics). https://www.amazon.com/Global-Airline-I ... b_title_bk


TheFlyingDisk wrote:
Change fees should only be limited to the fare difference if any. I don't see any justification for tacking on the change fees since making the change isn't exactly hard to do.


The point isn't to charge because of the cost to provide the service, the point is to discourage changes/force those that need the flexibility to buy a higher priced flexible ticket. It's a similar concept to congestion tolling or a soda tax. It's about steering people towards the right fare class product, not the revenue. If there were more effective ways to sift out business travelers from leisure travelers, I'd love to hear anyone's ideas! Airlines have generally found change fees/flexibility and Saturday night/min stay requirements as the most effective way to price discriminate.

The main reason airlines need to price discriminate is that airline seats today are sadly a perishable, fungible commodity. Once an airline commits to operating a flight by loading it into the schedule, costs are largely fixed - aside from the relatively low marginal cost of fuel/peanuts for each additional pax. Unlike nearly every other product sold in the world, the people who need a flight most and are willing to pay the most are the people who show up last (last minute business travelers, etc.) The people willing to pay the least (leisure passengers) want to book first. Sell the entire plane out in advance at leisure fares, and you lose money even with a full flight. Hold back too many seats for last minute travelers, the plane goes out more than half empty (and still loses money). There's an entire branch of revenue management science that helps airlines optimize how many seats to hold back for last-minute, high fare customers, and how many to make available to leisure travelers in advance at a lower price. The trick is how to tell who's a business traveler and who's a leisure traveler.

If change fees were to be regulated away/capped too low, airlines would lose one of their most important ways to distinguish leisure passengers from business passengers. From experience, I would venture to say that the lowest available one-way fare on most routes (with sufficient advance purchase, etc.) is set below fully-allocated unit cost. Change fees and min stay requirements help preserve this fare for price sensitive leisure customers, leaving business travelers to pay a higher fare, dragging the average fare for the flight up, and allow airlines to (barely, these days) earn their cost of capital.

If change fees were capped or otherwise overregulated, the following would likely happen:

(1) More business/high willingness to pay (WTP) customers would end up purchasing the lowest available fare, since they have no incentive to do otherwise. Sales of high-priced tickets decline, and average fare temporarily drops.
(2) Lowest published fares would have to rise in order to maintain average segment fare, or airlines would start bleeding cash again. Given the relatively consolidated state of the industry, I'd bet that the former is more likely. $249 r/t LAX-JFK fares would be history.
(3) Airlines would need to invent new revenue management "fences" to help distinguish between low WTP and high WTP passengers. Sadly, this would likely involve making basic economy worse or main cabin way more expensive.


You make way too much sense. You hit the nail on the head.
 
DFWAviator76
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 1:54 pm

I see many arguments here about what a 'reasonable' change fee is, whether they are justified with 21st century technology, whether they are justified because Southwest profits without them, and under what circumstances they 'should' or 'should not' apply.

My question: Does the answer to all of these issues lie in having the government give a blanket edict on these fees? Do we really trust politicians and government bureaucrats, rather than airlines and consumers, to make these policy decisions? If so, why?
 
Bald1983
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 2:04 pm

jumbojet wrote:
VS11 wrote:
"Doing away with changes to nonrefundable fares would make airline flights more like baseball games or concerts, where customers aren’t typically reimbursed if they buy tickets and can’t use them. t.


United's very own Scott Kirby first mentioned that flying was a lot like attending a concert. The closer you get to the stage, the more the ticket costs so the closer you get to the front of the plane, the more it should cost. That was his way of trying to justify charging customers more for economy plus seats. Now, it seems that AA is using the same phraseology.

Hey Scott and Doug; WAKE UP AND SMELL THE ANGER IN PEOPLE. .People attend a concert or a sporting event because they enjoy it and they want to, thus they will pay more to sit closer to the front. People generally fly because they have to, NOT because they enjoy it. The airlines have already taken the FUN out of flying. So Scott and Doug, please STOP comparing seats in an airplane to that of attending a sporting event or concert. If I was your boss (which in a way I am) I would fire you for saying something so ridiculous.

I can only hope that Ed Bastian doesn't use the same analogy.


WAKE UP AND SMELL REALITY. Airlines are not charities. They are a business out to make a profit. You have no right to fly for cheap. The non-refundable fare allows for airlines to offer the sat at the lower price. It can be truly non-refundable or airlines can put on change fees. Take away the change fees, airlines can either eliminate the fees and truly just say, if you need to change, "Tough luck" or eliminate the non-refundable ticket altogether which will cause everyone's ticket prices to rise. Either way, many, I suspect you among them, will scream bloody murder. What will not happen is that airlines will just allow cheap non-refundable tickets to be treated as more expensive refundable tickets. Once again, you have no right to a cheap fare. Most people who buy the non-refundable cheap fares, do not, contrary to what you wrote, "HAVE" to travel. They choose to do so to go somewhere they want to go. So, comparing it to a concert is not out of line.
 
Bald1983
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 2:05 pm

jumbojet wrote:
VS11 wrote:
"Doing away with changes to nonrefundable fares would make airline flights more like baseball games or concerts, where customers aren’t typically reimbursed if they buy tickets and can’t use them. t.


United's very own Scott Kirby first mentioned that flying was a lot like attending a concert. The closer you get to the stage, the more the ticket costs so the closer you get to the front of the plane, the more it should cost. That was his way of trying to justify charging customers more for economy plus seats. Now, it seems that AA is using the same phraseology.

Hey Scott and Doug; WAKE UP AND SMELL THE ANGER IN PEOPLE. .People attend a concert or a sporting event because they enjoy it and they want to, thus they will pay more to sit closer to the front. People generally fly because they have to, NOT because they enjoy it. The airlines have already taken the FUN out of flying. So Scott and Doug, please STOP comparing seats in an airplane to that of attending a sporting event or concert. If I was your boss (which in a way I am) I would fire you for saying something so ridiculous.

I can only hope that Ed Bastian doesn't use the same analogy.


WAKE UP AND SMELL REALITY. Airlines are not charities. They are a business out to make a profit. You have no right to fly for cheap. The non-refundable fare allows for airlines to offer the sat at the lower price. It can be truly non-refundable or airlines can put on change fees. Take away the change fees, airlines can either eliminate the fees and truly just say, if you need to change, "Tough luck" or eliminate the non-refundable ticket altogether which will cause everyone's ticket prices to rise. Either way, many, I suspect you among them, will scream bloody murder. What will not happen is that airlines will just allow cheap non-refundable tickets to be treated as more expensive refundable tickets. Once again, you have no right to a cheap fare. Most people who buy the non-refundable cheap fares, do not, contrary to what you wrote, "HAVE" to travel. They choose to do so to go somewhere they want to go. So, comparing it to a concert is not out of line.
 
calt03
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 2:08 pm

I have the easiest fix. Can be implemented in one or both ways.

Airlines are required to state in a one a5 sized screen or printout when booking stating -
Allowable hand luggage
Checked luggage
Meals
Change fees
In a simple tick or cross format against each of these 4 items

And/or

12hrs mandated cooling off period. Not available for flights departing within 12hrs of booking.

Simple.
 
Cubsrule
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 2:12 pm

RushmoreAir wrote:
Yossarian22 wrote:
The point isn’t the base fair of $65. The point is that a ticket with less restrictions that also includes baggage and other things is a little more than a 100% mark up, for AA a ticket that does not include baggage or more comfortable seats, just the right to cancel/change is a 250ish% markup.

I get that 4 hour flights for $65 aren’t possible in the U.S. economic environment.


That $140 fare is a $120 base, probably fare basis code SUAIZNM1, which also carries a 14 day advance purchase restriction, whereas the $440 flexible fare - basis code K0AJZRN1 - is theoretically a walk-up fare. Not that I necessarily agree that this method makes sense, but in the economic modeling world you would associate a disutility with the change fee restriction (maybe valued at $160 or something for a business traveler with an 80% chance of changing before departure in this example), then an additional disutility with the A/P restriction (let's say $150 for example). A theoretically logical passenger with those disutilities would choose the lowest sum of price + disutility, which in this case would be $140 tix + $160 change disutility + $150 A/P disutility = $450 for the "cheap" ticket, and $440 for the flexible ticket.

When I first saw this reasoning, I totally agree that it didn't make sense to me. Then I saw how many people really do just purchase last minute tickets or purchase flexible tickets on an expense account "because they can", and now I get it.


There is also an accounting headache utility. Most of my “changes” are actually cancellations, so on a nonrefundable ticket I wind up banking the remaining post-change-fee funds. Unless I can be reasonably certain that I will fly that airline for that client and matter in the near future (we bill clients separately for individual engagements), accounting for that money is very difficult. For me this probably has more utility/value than the a/p restriction. Most of my trips start to take shape reasonably far in advance.
I can't decide whether I miss the tulip or the bowling shoe more
 
Cubsrule
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 2:14 pm

calt03 wrote:
I have the easiest fix. Can be implemented in one or both ways.

Airlines are required to state in a one a5 sized screen or printout when booking stating -
Allowable hand luggage
Checked luggage
Meals
Change fees
In a simple tick or cross format against each of these 4 items

And/or

12hrs mandated cooling off period. Not available for flights departing within 12hrs of booking.

Simple.


Take a look at AC’s booking interface. Isn’t that close to what you envision? Their cooling off period is 24 hours, however.
I can't decide whether I miss the tulip or the bowling shoe more
 
qcpilotxf
Posts: 203
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 2:16 pm

xdlx wrote:
Any bill in congress should consider that the realities of 21st century. Airlines should NOT be Overbooking flights. This practice has been used with the excuse to "maximize revenue" and utilizing the logic that folks do change plans and this is the way to avoid spoilage. However this excuse, only applied in the days where you had a paper ticket to EXCHANGE for your seat, the airline needed the paper ticket to collect the fare. Now days with e-tickets the funds are in the company bank at the moment the ticket is purchased. OVERBOOKING IS A PRACTICE that is very 20th century and its USEFUL purpose is well past us. It creates unnecesary stress to the entire system of CI and processing a flight. Airports should be in the business of ENHANCING the EXPERIENCE not make it more like a 'cattle call'.


I feel like you understand the concept of oversales but do not understand the purpose of oversale. Spoilage is the same today as it was 50 years ago, if a seat is open that is money left on the table. No if ands or buts about that. Why should a for profit company no owned the the government not want to fill that seat? Just because the money is not instantly available doesn't change the concept.

If a private (as in not owned by the government) corporation chooses to no enhance the experience and chooses to go for the money instead who is the goverment to stop them? People can "vote with their feet" and fly a different airline or drive even if they don't want to pay the fees.
 
SurlyBonds
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 2:27 pm

DFWAviator76 wrote:
I see many arguments here about what a 'reasonable' change fee is, whether they are justified with 21st century technology, whether they are justified because Southwest profits without them, and under what circumstances they 'should' or 'should not' apply.

My question: Does the answer to all of these issues lie in having the government give a blanket edict on these fees? Do we really trust politicians and government bureaucrats, rather than airlines and consumers, to make these policy decisions? If so, why?


"Politicians and government bureaucrats" (nice appeal to the gallery, BTW) have some degree of accountability to the general public. Airline management has no accountability to customers or other stakeholders, but effectively only to shareholders.
 
DFWAviator76
Posts: 72
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 2:56 pm

SurlyBonds wrote:
"Politicians and government bureaucrats" (nice appeal to the gallery, BTW) have some degree of accountability to the general public. Airline management has no accountability to customers or other stakeholders, but effectively only to shareholders.


I respectfully disagree.

First, bureaucrats don't have much accountability to the public. They are, to a large degree, insulated from the political process. Politicians are accountable on a macro level. This is one of myriad issues upon which they are judged.

Airline management is accountable to the board of directors and shareholders. If they cannot develop and sell a product that the public will consume, the company will ultimately not be profitable.

It's much easier (and common) for an airline employee/manager/executive to be fired than a politician or bureaucrat.
 
Yossarian22
Posts: 158
Joined: Wed Feb 21, 2018 7:25 am

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 2:57 pm

Bald1983 wrote:
jumbojet wrote:
VS11 wrote:
"Doing away with changes to nonrefundable fares would make airline flights more like baseball games or concerts, where customers aren’t typically reimbursed if they buy tickets and can’t use them. t.


United's very own Scott Kirby first mentioned that flying was a lot like attending a concert. The closer you get to the stage, the more the ticket costs so the closer you get to the front of the plane, the more it should cost. That was his way of trying to justify charging customers more for economy plus seats. Now, it seems that AA is using the same phraseology.

Hey Scott and Doug; WAKE UP AND SMELL THE ANGER IN PEOPLE. .People attend a concert or a sporting event because they enjoy it and they want to, thus they will pay more to sit closer to the front. People generally fly because they have to, NOT because they enjoy it. The airlines have already taken the FUN out of flying. So Scott and Doug, please STOP comparing seats in an airplane to that of attending a sporting event or concert. If I was your boss (which in a way I am) I would fire you for saying something so ridiculous.

I can only hope that Ed Bastian doesn't use the same analogy.


WAKE UP AND SMELL REALITY. Airlines are not charities. They are a business out to make a profit. You have no right to fly for cheap. The non-refundable fare allows for airlines to offer the sat at the lower price. It can be truly non-refundable or airlines can put on change fees. Take away the change fees, airlines can either eliminate the fees and truly just say, if you need to change, "Tough luck" or eliminate the non-refundable ticket altogether which will cause everyone's ticket prices to rise. Either way, many, I suspect you among them, will scream bloody murder. What will not happen is that airlines will just allow cheap non-refundable tickets to be treated as more expensive refundable tickets. Once again, you have no right to a cheap fare. Most people who buy the non-refundable cheap fares, do not, contrary to what you wrote, "HAVE" to travel. They choose to do so to go somewhere they want to go. So, comparing it to a concert is not out of line.


This is such a problematic business philosophy. It is fundamentally saying the quality of the product doesn’t matter, the customer doesn’t matter, the employee doesn’t matter, rather simply only the profits matter.
 
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Tugger
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 3:15 pm

Bald1983 wrote:
TheFlyingDisk wrote:
Change fees should only be limited to the fare difference if any. I don't see any justification for tacking on the change fees since making the change isn't exactly hard to do.


Simple, if you do not want change fees, do not buy non-refundable tickets.

Not a viable solution. The airlines themselves want non-refundable tickets sold. Airlines push the prices lower and lower to get people to commit and lock themselves in. This locks future revenue for the airline. If people buy refundable tickets, the airlines will, as they have shown, lower prices to get people to lock in because the airlines want hat revenue locked. They do not want it able to be refunded.

Additionally you are asking people to forego the very human "benefit analysis" which pushes people to buy early and cheap if possible.

DFWAviator76 wrote:
My question: Does the answer to all of these issues lie in having the government give a blanket edict on these fees? Do we really trust politicians and government bureaucrats, rather than airlines and consumers, to make these policy decisions? If so, why?

As I have pointed out "the government" is the consumer, is the public. Individual consumer can't impact the airlines to change their policies or contract conditions. So they step in with legislative action. That is the hammer the public has in it tool chest to deal with things they find unreasonable that industry won't resolve themselves. As I noted above, the nature of the beast is difficult if not impossible to overcome. Companies will always do what they can to maximize their benefit. If they "do right" while others don't they often are harmed economically, or investors fear they will be, and lose business or value so they can't easily abandon their identity and change policies.

At this point airlines have demonstrated that they like fees and are turning more and more to them for revenue and profit. And they use change fees as both a revenue source and as others have stated, a tool to impact customer behavior, not to cover costs. By not changing, and with the majority of the industry following the same path and having similar fee structures, it shows there is no competitive environment that will resolve the situation. This causes a situation where the only way to address them is by consumer driven governmental intervention to create a level playing field for all airlines to follow.

Tugg
I don’t know that I am unafraid to be myself, but it is hard to be somebody else. - W. Shatner
There are many kinds of sentences that we think state facts about the world but that are really just expressions of our attitudes. - F. Ramsey
 
rta
Posts: 1414
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 3:15 pm

Airline tickets for the average traveller are so cheap because airlines can charge more to people who need the flexibility.

I hate fees as much as the next person, but this is just going to raise prices for the people who don't need the flexibility.

I think there are more important things for the government to regulate, than worrying about change fees which have burned what I'm guessing is a small but vocal group.

What about hotel, car rental, bus, and train reservations?
 
DFWAviator76
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 3:24 pm

Tugger wrote:
At this point airlines have demonstrated that they like fees and are turning more and more to them for revenue and profit. And they use change fees as both a revenue source and as others have stated, a tool to impact customer behavior, not to cover costs. By not changing, and with the majority of the industry following the same path and having similar fee structures, it shows there is no competitive environment that will resolve the situation. This causes a situation where the only way to address them is by consumer driven governmental intervention to create a level playing field for all airlines to follow.


If the airlines are using these fees as a revenue/profit source, and a tool to impact customer behavior rather than "cover costs," what's the problem? The purpose of revenue in any business is not to cover costs, but to maximize profit. The cost of providing a good or service means nothing if someone will not pay a corresponding price that allows a decent return.

As for the competitive question, there is plenty of competition. People can fly airlines like Southwest that don't charge the fees. They can drive. They can meet/talk via phone or videoconference. They can take Greyhound or Amtrak.

Bottom line is that if you don't like the fees, you have options. Personally, I'd rather pay a change fee now and again than pay for a full-fare, flexible ticket. If you don't want to, fly Southwest or make another choice. But don't force me to forego that choice.
 
MaksFly
Posts: 366
Joined: Fri Jun 24, 2016 5:50 am

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 3:43 pm

LAX772LR wrote:
phlswaflyer wrote:
There is not and never has been a rationale for a ticket change fee and one as high as $200. Never. Ever.
Here ya go. Take a moment to educate yourself on the issue:
RushmoreAir wrote:
Change fees exist, not because they're a revenue source (although that is a nice bonus), but because they primarily serve as a disincentive for corporate/high willingness-to-pay customers to choose the lowest available fare class instead of buying up to a more flexible fare. Change fees work because they fence off the lower fares for early-booking leisure passengers who are OK with locking themselves into a time.

:checkmark: :checkmark: :checkmark: :checkmark: :checkmark:

And to add:
Only to a certain degree. The highest-yielding and/or most-frequent such customers are often immune to such fees and restrictions due to their status and credit card privileges.


phlswaflyer wrote:
Southwest makes plenty of money, runs a MUCH better shop and people like to fly them.

In SOME regards, and for SOME people.
Southwest is on the other hand worthless in other regards, for other travelers.


Here is the thing though... those "corporate/high willingness-to-pay customers" are generally frequent flyers with top status. As such, much like I did when I travelled, you would buy the cheapest ticket and then do same day change to earlier time, etc.

These high fees are generally screwing over less frequent flyers, I would think. Personally, I paid more fees BEFORE I got status then when I got status with Delta and United and kept buying cheap tickets and did changes, free bags, upgrades, etc.
 
MaksFly
Posts: 366
Joined: Fri Jun 24, 2016 5:50 am

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 3:53 pm

DFWAviator76 wrote:
Tugger wrote:
At this point airlines have demonstrated that they like fees and are turning more and more to them for revenue and profit. And they use change fees as both a revenue source and as others have stated, a tool to impact customer behavior, not to cover costs. By not changing, and with the majority of the industry following the same path and having similar fee structures, it shows there is no competitive environment that will resolve the situation. This causes a situation where the only way to address them is by consumer driven governmental intervention to create a level playing field for all airlines to follow.


If the airlines are using these fees as a revenue/profit source, and a tool to impact customer behavior rather than "cover costs," what's the problem? The purpose of revenue in any business is not to cover costs, but to maximize profit. The cost of providing a good or service means nothing if someone will not pay a corresponding price that allows a decent return.

As for the competitive question, there is plenty of competition. People can fly airlines like Southwest that don't charge the fees. They can drive. They can meet/talk via phone or videoconference. They can take Greyhound or Amtrak.

Bottom line is that if you don't like the fees, you have options. Personally, I'd rather pay a change fee now and again than pay for a full-fare, flexible ticket. If you don't want to, fly Southwest or make another choice. But don't force me to forego that choice.


I would agree with you for regular business, YES... But... living in the United States, if you need to go across the country, isn't airfare and air travel a necessity? As such, should it not be an essential service?

We are not talking about a country like Belgium which you can easily drive across in a reasonable amount of time. Furthermore, can't exactly drive over or take the ferry to Hawaii or Alaska, or some major US Territories.

No one NEEDs an iPhone or a designer pair of shoes, people DO need to travel however. So after having the US residents bail out the airlines... how entitled are the airlines to record profits? This is primarily focused on the US 3. I have ZERO issues with say Spirit or JetBlue as they did not receive taxpayer help... BUT the Big 3, and anyone who received taxpayer money should sure as hell be limited to making exuberant profits off of tax payers, on what I believe is an essential service, at the very least, until they pay back ALL of the money received and debts written off in bankruptcy.
 
MaksFly
Posts: 366
Joined: Fri Jun 24, 2016 5:50 am

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 3:56 pm

Tugger wrote:
Bald1983 wrote:
TheFlyingDisk wrote:
Change fees should only be limited to the fare difference if any. I don't see any justification for tacking on the change fees since making the change isn't exactly hard to do.


Simple, if you do not want change fees, do not buy non-refundable tickets.

Not a viable solution. The airlines themselves want non-refundable tickets sold. Airlines push the prices lower and lower to get people to commit and lock themselves in. This locks future revenue for the airline. If people buy refundable tickets, the airlines will, as they have shown, lower prices to get people to lock in because the airlines want hat revenue locked. They do not want it able to be refunded.

Additionally you are asking people to forego the very human "benefit analysis" which pushes people to buy early and cheap if possible.

DFWAviator76 wrote:
My question: Does the answer to all of these issues lie in having the government give a blanket edict on these fees? Do we really trust politicians and government bureaucrats, rather than airlines and consumers, to make these policy decisions? If so, why?

As I have pointed out "the government" is the consumer, is the public. Individual consumer can't impact the airlines to change their policies or contract conditions. So they step in with legislative action. That is the hammer the public has in it tool chest to deal with things they find unreasonable that industry won't resolve themselves. As I noted above, the nature of the beast is difficult if not impossible to overcome. Companies will always do what they can to maximize their benefit. If they "do right" while others don't they often are harmed economically, or investors fear they will be, and lose business or value so they can't easily abandon their identity and change policies.

At this point airlines have demonstrated that they like fees and are turning more and more to them for revenue and profit. And they use change fees as both a revenue source and as others have stated, a tool to impact customer behavior, not to cover costs. By not changing, and with the majority of the industry following the same path and having similar fee structures, it shows there is no competitive environment that will resolve the situation. This causes a situation where the only way to address them is by consumer driven governmental intervention to create a level playing field for all airlines to follow.

Tugg


Spot on.

The one thing we don't talk about is that the reason that airlines LOVE fees is that they are largely untaxed and means revenue, versus it being taxed if it was part of the fare.
This is a key driver of Spirit's pricing and why you are smart to go and pay for the ticket in person and not be charged the $20 or more fees for buying it online.
 
User avatar
Tugger
Posts: 10372
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 4:06 pm

DFWAviator76 wrote:
Tugger wrote:
At this point airlines have demonstrated that they like fees and are turning more and more to them for revenue and profit. And they use change fees as both a revenue source and as others have stated, a tool to impact customer behavior, not to cover costs. By not changing, and with the majority of the industry following the same path and having similar fee structures, it shows there is no competitive environment that will resolve the situation. This causes a situation where the only way to address them is by consumer driven governmental intervention to create a level playing field for all airlines to follow.


If the airlines are using these fees as a revenue/profit source, and a tool to impact customer behavior rather than "cover costs," what's the problem? The purpose of revenue in any business is not to cover costs, but to maximize profit. The cost of providing a good or service means nothing if someone will not pay a corresponding price that allows a decent return.

As for the competitive question, there is plenty of competition. People can fly airlines like Southwest that don't charge the fees. They can drive. They can meet/talk via phone or videoconference. They can take Greyhound or Amtrak.

Bottom line is that if you don't like the fees, you have options. Personally, I'd rather pay a change fee now and again than pay for a full-fare, flexible ticket. If you don't want to, fly Southwest or make another choice. But don't force me to forego that choice.

If the public is using the government to address a problem the companies won't then what is the problem?
If the change fee is there "to help provide good service" then demonstrate that. Demonstrate the public benefit and the impact to the company - the cost of changing a ticket - that demands such a fee. If you can't don't be surprised when the public says "No" and places a rule on the airlines that they have to follow. Remember the airline still gets to keep the passengers money, whether for future use or not, a non-refundable ticket is just that (unless exception circumstances and generosity on the airlines part), and they can charge the going rate for the new flight. Just the fee charged to change the ticket is being affected.

There is no "plenty of competition" that you speak of. Southwest moved nearly 160 million passengers last year and over 550 million passengers flew on other airlines. Can Southwest just fly all those other passengers if those passenger want to fly on Southwest? No. "Competition" in airlines is capacity constrained and capacity is not easily added due to market constraints. Surely you understand this. So the competition is limited at best but in truth in the market there is no real competition on change fees, change fees are absolutely dominant and so are near impossible to change with just one limited entrant "challenging" them.

https://www.bts.gov/newsroom/2017-traff ... us-flights

And for the other "competition" that you identify.... competition is an identical or near identical product or service (see Apple versus other cell phones, or printers vs other printers, or broadcast TV vs cable vs streaming, etc.), not wildly dissimilar ones. Airlines, due there timeliness, ability to physically transport people quickly over long distances, scale, and yes cost, do not directly compete with the "competition" you identified. A teleconference will not do when mom goes to help her new-mother daughter, or the business deal that needs to be done "off-line" for various reasons, etc.

Tugg
I don’t know that I am unafraid to be myself, but it is hard to be somebody else. - W. Shatner
There are many kinds of sentences that we think state facts about the world but that are really just expressions of our attitudes. - F. Ramsey
 
DFWAviator76
Posts: 72
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 4:58 pm

MaksFly wrote:
I would agree with you for regular business, YES... But... living in the United States, if you need to go across the country, isn't airfare and air travel a necessity? As such, should it not be an essential service?

We are not talking about a country like Belgium which you can easily drive across in a reasonable amount of time. Furthermore, can't exactly drive over or take the ferry to Hawaii or Alaska, or some major US Territories.

No one NEEDs an iPhone or a designer pair of shoes, people DO need to travel however. So after having the US residents bail out the airlines... how entitled are the airlines to record profits? This is primarily focused on the US 3. I have ZERO issues with say Spirit or JetBlue as they did not receive taxpayer help... BUT the Big 3, and anyone who received taxpayer money should sure as hell be limited to making exuberant profits off of tax payers, on what I believe is an essential service, at the very least, until they pay back ALL of the money received and debts written off in bankruptcy.


Air travel is not a "necessity." Many people - probably half the population - live just fine without ever taking an airline flight. The United States is not significantly larger today than it was 100 years ago when there was no such thing as commercial air travel.

And what "record" profits are you taking about? All the major airlines, when they are profitable, show operating margins of less than 10%. The Apples and Amazons of the world earn 40%. Airlines are not immensely profitable enterprises, especially when compared to other companies and industries.

With respect to bankruptcy, I understand how that can be viewed as a "subsidy," but the reality is that every company in America has the right to file for bankruptcy under certain conditions. The airlines did not receive any "special" treatment by filing bankruptcy; they did so utilizing a law that is universally available. And they are penalized in the sense that their borrowing costs are generally higher than companies/airlines that have not gone bankrupt.
 
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par13del
Posts: 10260
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Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 6:14 pm

qcpilotxf wrote:
Why should a for profit company no owned the the government not want to fill that seat?

If they really really wanted to fill those seats they would follow another WN example and cap their walk up fares. There is a point when a walk up fare is about filling a seat versus taking advantage of a situation.

As for the government, my suggestion is that they take a page out of the airlines books and start taxing fee's, no need to tell the airlines how much to charge, simple put your percentage in and be done with it, much much simpler.
 
caverunner17
Posts: 267
Joined: Tue Jun 14, 2016 9:50 pm

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 6:30 pm

Pellegrine wrote:
Domestic $200 change fees for regular pax (no status/cc) is highway robbery...about time Congress does something about it.

I agree. It'd be one thing if it were say 24 or 48 hours out, but if you're 30 or 60 days out, it's not like they don't have a chance to resell the seat (probably for a higher fare class). I could see an increasing penalty. Say $25 90 days out, $50 60 days out, $75 30 days out, $100 7 days out and $200 within 48 hours.

That's fare to both the airline and consumer.
 
DFWAviator76
Posts: 72
Joined: Fri Oct 27, 2017 7:10 pm

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 6:47 pm

par13del wrote:
As for the government, my suggestion is that they take a page out of the airlines books and start taxing fee's, no need to tell the airlines how much to charge, simple put your percentage in and be done with it, much much simpler.


On this I agree (except with your use of the apostrophe). I generally have no problem with fees, ancillary or otherwise. If an airline thinks consumers will respond well to unbundling items like checked bags, food, assigned seats, etc, then let them; let's see how the marketplace reacts.

However, if fees are being used to game the tax system, that's another issue. Fees should be taxed like any other part of airfare unless clearly unrelated to the flight.
 
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einsteinboricua
Posts: 8343
Joined: Thu Apr 15, 2010 4:11 pm

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 8:41 pm

caverunner17 wrote:
Pellegrine wrote:
Domestic $200 change fees for regular pax (no status/cc) is highway robbery...about time Congress does something about it.

I agree. It'd be one thing if it were say 24 or 48 hours out, but if you're 30 or 60 days out, it's not like they don't have a chance to resell the seat (probably for a higher fare class). I could see an increasing penalty. Say $25 90 days out, $50 60 days out, $75 30 days out, $100 7 days out and $200 within 48 hours.

That's fare to both the airline and consumer.

I can get behind this proposal.

Seems fair and allows the airline to make a profit while being able to resell the seat.
"You haven't seen a tree until you've seen its shadow from the sky."
 
flyguy89
Posts: 2875
Joined: Tue Feb 24, 2009 6:43 pm

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 10:05 pm

MaksFly wrote:
Tugger wrote:
Bald1983 wrote:

Simple, if you do not want change fees, do not buy non-refundable tickets.

Not a viable solution. The airlines themselves want non-refundable tickets sold. Airlines push the prices lower and lower to get people to commit and lock themselves in. This locks future revenue for the airline. If people buy refundable tickets, the airlines will, as they have shown, lower prices to get people to lock in because the airlines want hat revenue locked. They do not want it able to be refunded.

Additionally you are asking people to forego the very human "benefit analysis" which pushes people to buy early and cheap if possible.

DFWAviator76 wrote:
My question: Does the answer to all of these issues lie in having the government give a blanket edict on these fees? Do we really trust politicians and government bureaucrats, rather than airlines and consumers, to make these policy decisions? If so, why?

As I have pointed out "the government" is the consumer, is the public. Individual consumer can't impact the airlines to change their policies or contract conditions. So they step in with legislative action. That is the hammer the public has in it tool chest to deal with things they find unreasonable that industry won't resolve themselves. As I noted above, the nature of the beast is difficult if not impossible to overcome. Companies will always do what they can to maximize their benefit. If they "do right" while others don't they often are harmed economically, or investors fear they will be, and lose business or value so they can't easily abandon their identity and change policies.

At this point airlines have demonstrated that they like fees and are turning more and more to them for revenue and profit. And they use change fees as both a revenue source and as others have stated, a tool to impact customer behavior, not to cover costs. By not changing, and with the majority of the industry following the same path and having similar fee structures, it shows there is no competitive environment that will resolve the situation. This causes a situation where the only way to address them is by consumer driven governmental intervention to create a level playing field for all airlines to follow.

Tugg


Spot on.

The one thing we don't talk about is that the reason that airlines LOVE fees is that they are largely untaxed and means revenue, versus it being taxed if it was part of the fare.
This is a key driver of Spirit's pricing and why you are smart to go and pay for the ticket in person and not be charged the $20 or more fees for buying it online.

That's a canard. All those ancillary fees ultimately feed into the bottom line of the airlines' profits, which are taxed. So if those "greedy" fees are in fact making the airlines more profitable, it means they're also paying more in taxes.

Why everyone's seemingly OK with most other private Fortune 500 companies raking in profit margins of 30+%, but somehow airlines FINALLY attaining middling high-teens margins is suddenly an ungodly example of greed is beyond me. Whether implementing a tax on ancillary fees or increasing corporate taxes, all it will succeed in doing is those costs still being passed on to passengers.
 
User avatar
usdcaguy
Posts: 1514
Joined: Mon Jan 26, 2004 12:41 pm

Re: AA May End Ticket Changes If Congress Limits Fees - Bloomberg

Thu Sep 20, 2018 10:37 pm

9w748capt wrote:
usdcaguy wrote:
aaflyer777 wrote:
And yet somehow Southwest makes money without charging change fees...


True, and yet somehow AA/UA/DL make lots of money allowing customers to standby the same day of travel for a nominal fee.


Well and I believe all three allow elites to same-day-standby (with varying restrictions) for free. So it's probably a miniscule number of people who are actually paying to standby.


Good point. But $75 is $75. For NOTHING.

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