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Airlines benefiting on cancellation fees

July 30, 2009

Change and cancellation fees amount to an added 3.2% of U.S. airline passenger revenue, totaling $527.6 million for the first quarter. Some airlines now make even more from these fees than they do from the much-maligned checked-baggage fees. Amid high fuel prices last year, several big airlines pushed up the change fee on domestic tickets to $150 from $100 last year. Budget carrier JetBlue recently increared its fee to $100 from a affordable $40.

Airlines say they charge change fees and cancellation penalties to give travelers incentives to purchase full-fare, unrestricted tickets and to limit no-shows for flights, reducing the need to overbook. They also say they make their tickets non-transferable because they don’t want companies buying up inventories of cheap tickets and doling them out for employee business trips or creating a secondary ticket market.

A Southwest spokeswoman says the carrier hasn’t had to rely on penalties to manage overbooking because it takes historical patterns of customer cancellations and changes into account. She says the airlines believes it draws more customers by making it easier to change travel plans if necessary.

Why should we be charged $150 to change a $200 ticket because someone got sick and couldn’t fly that day? A spokesman for American proffers the following advice: “Every traveler should weigh the likelihood they will have to change their itinerary prior to travel when assessing each fare type and price.”

Read more at Wall Street Journal’s article: Your Bad Luck Is a Windfall For Airlines



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