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.
American Airlines (NASDAQ:AAL)
Historical Stock Chart
From Dec 2020 to Jan 2021 Click Here for more American Airlines Charts.
American Airlines (NASDAQ:AAL)
Historical Stock Chart
From Jan 2020 to Jan 2021 Click Here for more American Airlines Charts.