American, Delta End Domestic Change Fees
August 31 2020 - 5:03PM
Dow Jones News
By Doug Cameron
American Airlines Group Inc. and Delta Air Lines Inc. said they
were removing change fees on most domestic flights, as the levies
emerged as a new competitive battleground among airlines.
The moves on Monday by the two largest U.S. carriers comes a day
after United Airlines Holdings Inc. said that it is permanently
ending flight change fees for most domestic flights, in the latest
effort to boost demand in an air-travel industry hit hard by the
coronavirus pandemic.
The sluggish rebound in passenger demand since April and
concerns that Covid-19 cases could rise during the fall and winter
have pushed airlines to identify new competitive strategies. The
carriers are seeking to provide passengers with more reassurance
about returning to the skies. Southwest Airlines Co. has never
charged baggage or change fees, a policy it has used as a marketing
tool.
American has gone a step further than United and Delta, dropping
fees for international flights to and from Canada, Mexico and the
Caribbean, as well as most domestic tickets. "We need to give
people a very good reason to do business with American Airlines,"
chief revenue officer Vasu Raja said in an interview.
Like United, American and Delta didn't remove charges from
long-haul flights, many of which are operated in tandem with
overseas partners. Mr. Raja said that could change at American when
international travel starts to return.
American also took steps to bolster its basic economy tickets by
allowing upgrades, which still can't be changed or refunded, but
offer stripped-down fares aimed at luring passengers from budget
carriers such as Southwest and Spirit Airlines Inc.
Ancillary fees have climbed fivefold over the past decade and
accounted for about 15% of sales at U.S. carriers last year,
according to consulting firm IdeaWorksCompany.
Delta generated $830 million and American $818 million in
revenue from change and cancellation fees last year, according to
the Transportation Department. Overall, U.S. carriers reaped $2.8
billion from the levies, with change fees ranging from $200 to
$500, which can sometimes exceed the original fare.
Some lawmakers last spring called for change fees to be
curtailed or removed altogether as a condition for federal aid to
the industry, but carriers have opted for voluntary relaxation in
an effort to lure back travelers.
Seat assignments and other extras have remained popular through
the pandemic-driven travel downturn, according to low-cost
specialists such as Spirit, which rely heavily on non-ticket
revenue.
Some carriers such as Delta continue to block middle seats, and
the industry continues to push for unified protocols for passenger
health screening, wrestling with issues such as customers who
become ill before they travel.
The looming end on Oct. 1 to federal payroll support payments
that included restrictions on furloughs and cutting flights has
also triggered has also triggered workforce reductions about which
the industry warned earlier in the year.
United said it would furlough 2,850 pilots in the coming months
if more federal aid doesn't emerge, and 36,000 employees -- almost
half its domestic workforce -- have been told their jobs will be at
risk. American said it would cut 1,600 pilots and as many as 19,000
workers in total.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
August 31, 2020 16:48 ET (20:48 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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