Why Southwest Should Consider a Change Fee

On Friday, Southwest announced it was adding a couple fees and increasing another. For most airlines, a Friday that sees a new or increased fee would just be called “Friday” but for Southwest, it creates some shockwaves. These fees are actually pretty friendly, and I can’t imagine anyone complaining, but the attention paid to this move shows just what kind of predicament Southwest finds itself in. And I’ve got a controversial suggestion.

But first, let’s talk about the three changes made on Friday. They are:

  • Small dogs and cats will be allowed onboard for the first time for $75 each way (American charges $100)

  • Unaccompanied minors (kids between 5 and 11 traveling without an adult) used to fly without an extra charge, but now they’ll have to pay $25 each way (American charges $100)

  • The third checked bag will now cost $50 instead of $25 (the first two are still free)

Like I said, these are hardly offensive charges. The pet fee is great, because it’s an additional option for those with small animals that wasn’t there before. The unaccompanied minor fee also makes sense. There is a cost to providing extra attention to children traveling alone, and $25 seems quite fair. And charging $50 for a third bag? Please. Anyone who is offended by that has never flown another airline and probably packs too much anyway.

These fees, however friendly they are, aren’t going to actually generate a ton of money for the airline. Southwest has made it clear that it needs to increase its revenues. In a rare corporate-speak moment, CEO Gary Kelly wrote in a blog post, “it is our fiscal responsibility to our Employees, our Customers, and our Shareholders to maximize our existing and potential revenue opportunities.”

The key for the airline now is to find ways to add fees that it thinks customers will find to be fair. In that same post, Gary says, “We truly believe in setting the right Customer expectation and not charging for those amenities that a Customer would ‘expect’ to get for free.” As a traveler, I appreciate that. But is there any low-hanging fruit that they could tweak to have a big revenue impact?

Yes. The change fee, or lack thereof.

I’m fairly sure that anytime the words “change fee” are put together, a collective gasp wafts out of Southwest’s headquarters. Southwest doesn’t do change fees, but I would argue that a change fee is in line with their strategy.

What traveler expects not to pay a change fee? A frequent Southwest traveler, yes, but not the rest of the world. Think about a $25 change fee. There are limited costs to Southwest for someone changing their itinerary, especially at the last minute. So would anyone really balk at a $25 change fee? Or what if you only charged the fee for changes within 7 days? The cost to the airline is the inability to resell that seat if it happens to close to departure. That seems like a fair fee to me.

Anything above $25 is too much for now, and certainly the $150 fee most airlines charge makes me cringe. But a $25 fee is enough for Southwest to be able to increase its revenues while still enabling customers to make relatively easy and inexpensive changes. I think this fits within what they’re trying to do.

What do you guys think?

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69 Comments on "Why Southwest Should Consider a Change Fee"

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Jim Huggins
Guest
It all depends on what you charge the “change fee” for. I don’t fly terribly often — more like 2-3 times a year. But my biggest annoyance is the airlines that charge a “change fee” if you want to fly stand-by on an earlier flight. I completely get that airlines want to sell that empty seat that I have my eye on. But I already bought a seat on my later flight … which, by the way, might be oversold. If they can’t sell that empty seat, does it really cost anything to let me fly out earlier, thereby giving… Read more »
Gray
Guest

Raise booze prices on Southwest to five bucks. Their current four dollar price, while favorable, in my opinion, is below the industry standard for libations on airplanes. I see it as an extra revenue opportunity that would cause passengers to grouse and gripe a bit, but one that still allows Southwest to look like a “friendlier” airline.

Duane
Guest
Actually, one area that Southwest has not been as friendly as the other airlines is standby. If you want to fly standby, you have to pay the difference in fare between what you paid and the current price. If you bought your ticket at the last minute, no problem. But if you bought it way in advance at a cheap price, you will likely pay a lot to be able to standby. The no change fee on Southwest is a huge benefit, but I wouldn’t be opposed to a small change fee. I split all of my flying between Continental… Read more »
dan
Member

I would disagree. From completely anecdotal evidence from FlyerTalk, the lack of change fee has been attracting some legacy fliers over to WN. A change fee, even a small one, could stop that.

Al Adels
Guest

I choose to fly southwest many times each year because there is no change fee. Other airlines typically match Southwest’s fares, so that isn’t the deciding factor. The difference is that I can make changes on Southwest, or cancel and apply to a future trip, without a fee. If Southwest changed this policy so that there was a fee, it would remove one of the key differences between them and the others.

eponymous coward
Guest

So, I guess their advertising would be changed to “No Fees, Sort Of”?

There are a number of things I trade off to fly WN: first class, assigned seats, no standby unless you’re willing to pay the walkup fare. Part of the reason I will make the tradeoff is the fact that even without being an elite, there are no change fees.

WN becomes considerably less attractive to me with change fees, especially since AS waives them if you’re a senior elite.

gtrjay
Guest

I
I think SWA NOT having a change fee is a great thing. Changes fees are by far one of the biggest ripoff’s an airline can charge for. The process of changing tickets is so simple now with computers, and technology that it doesn’t make sense. Airlines charge changes for one reason only, because they can.

This helps SWA and other LCC be different by charging a small fee or none at all. I think a 2nd bag fee is more realstic than a change of ticket fee.

Matthew
Guest
Perhaps I am mad, but I don’t expect to have to pay a change fee, I mean, all they’re doing is amending some info in their system, surely? Usually the difference between the price paid and the new price is pretty hefty anyway so it’s not like we’re asking for something for nothing. Chances are they will flog the seat I vacate anyway and all they’ll include the booking costs etc. in that seat price too. It’s just money for old rope. THIS is why average people like me, rather than industry insiders can’t bear airlines. In any other industry,… Read more »
gtrjay
Guest

PS – To add to my post. I am not elite flyer and have no desire to ever be. I support companies that offere a product/service. I normally fly AA on international-Latin American routes. Living in DTW, I will give the new Delta a try as well. However, SWA gest at least 80+% of my domestic business.

So being “elite” and using the special carpet to board doesn’t sway my choice when booking tickets. If I flew everyday or everyweek for business, maybe I would feel differently??? Maybe not.

Carl
Guest

What irks me about Southwest is not being able to stand by for an earlier or later flight without paying the difference up to the walk-up fare. It’s great to be able to apply the full value of the ticket to another ticket, but it’s a huge hassle and sometimes a huge expense not be able to travel at another time on the same day, say if you are running early or late. I’d much rather have a change fee and same-day travel flexibility at the already booked fare, something you get on every other airline.

tep2
Member

In a perfect world, a GRADUATED change fee might make sense. (For example, if one makes a change online to a flight 3 months away, the “cost” of doing so must be pretty close to zero.) However, if Southwest was to introduce such a fee now, it would essentially destroy the good will it has captured by its current no-fee policies. Keep in mind that 2 other large carriers (jetBlue and Alaska Airlines) do not have a change fee.

David SF eastbay
Member
I don’t mind a change fee if it’s a small fee. Can see a reason to charge a $150.00 fee like most carriers do, that just makes to sense other then to ‘steal’ money from people. You still have to meet certain rules of the fare you purchased so there are times you have to upgrade to a higher fare anyway. And don’t even get me started on why a change fee needs to be higher then the fare you paid for in the first place. Not that is truely senseless. Right now the majors all have a one way… Read more »
JS
Guest

$25 is a heck of a lot more reasonable than the legacy’s $150 fee.

Would I prefer no fee? Sure.

donna_pursell
Member

Yea 25 bucks is more than fair–its the other guys that p–s me off.
If Gary really needs more bucks; then a reasonable fee for exit and bulkhead seats might be an idea

nsx
Guest
First, Southwest will let you standby for a later flight without any upcharge if you miss your flight by less than 2 hours. This is the familiar “flat tire” rule common to most airlines. Second, even small change fees would force major changes in the way I book travel. My Southwest booking normally total between $2000 and $3000, extending several months into the future. With no change fees, my booking decision is simple: if I like the fare, I buy it. Maybe I fly it, maybe I don’t, but Southwest gets to keep my money and I will eventually use… Read more »
The Traveling Optimist
Guest
The Traveling Optimist
I witnessed Delta charge a passenger $50 to take an earlier flight to Boston from BWI last week. The week before American did not charge me a dime to fly home to Dallas four hours earlier from Phoenix. I was on a restricted ticket and am not even AAdvantage Gold. I asked at the counter upon arrival what my options were. I received a gate pass and a smile, free of charge. If I was not already at the airport and had wanted to confirm a seat on an earlier flight the scenario would undoubtedly have been different. Otherwise I… Read more »
Zack Rules
Guest

I wonder if the reason Southwest doesn’t charge change fees is to encourage people to change to a higher fare. When you change your flight (or at least when I do anyway), it’s almost always to a higher fare. Southwest gets the money from the original fare and the difference between the higher fare. When you slap a fee on that, it might discourage the seemingly more lucrative practice today.

Mike
Guest

Any change fees would have us seriously reconsidering the legacies (even DL/NW) for our domestic travel. The lack of a change fee is a benefit that keeps many knowledgeable travelers at Southwest.

nsx
Guest
Southwest will let you take the earlier flight for free if the flight you booked is expected to be delayed 30 minutes or more. If neither this exception nor the flat tire rule applies, then you have to pay the upgrade to full fare. Southwest wants to be able to offer low fares for off-peak times and high fares for peak times. Customers want to buy the low fare and fly at the peak time. You may think that it costs the airline nothing to let you take the earlier flight, but if you consider the initial purchasing decision as… Read more »
The Traveling Optimist
Guest
The Traveling Optimist
NSX – I agree to a point. The initial buying decision does drive the time of travel and the desired fare. Southwest is “merely” asking its customers to honor that agreement by not diluting revenue on peak flights thru stand-by requests. Here is where we diverge: Day of Departure Revenue Opportunity. The model is built to hold last minute seats for full fare walk-ups. Granted. Last minute walk-ups demand confirmed space as part of their purchase agreement, not stand-by. That, plus the entire point of stand-by means that almost up to the last seat on the peak flight, a customer… Read more »
MathFox
Guest
My experience with change fees is with transatlantic travel, mostly on KLM/NW. Ignoring some fare details there were three fare classes (for economy): * Full fare, refundable (free or $/€25 change) * Half fare, non refundable, $150/€100 change fee * Budget economy, no refund or change For many journeys we (boss and me) knew we would go, but not the exact day, but the difference in fares between full and half allowed for half a dozen changes in schedule. So we bought the half fare ticket, accepted change fees for two changes and kept $800 in our pockets. (A too… Read more »
nsx
Guest

Traveling Optimist, I am sure there is a revenue maximization point somewhere between free standby and paying full fare to standby on an earlier flight than you originally booked. Southwest probably ought to explore that territory with a fee for successful standby of, say, 20% of the full fare. Make it 10% of the full fare if the departure time difference is an hour or less.

The problem is that this begins to get complicated to explain to customers, and that complication might even cause costly flight delays.

Benjamin Perley
Member

I would accept a change fee if it meant they were bringing their fare rules in line with other airlines. The no change fee policy really only helps people who want to cancel the entire trip, or are changing the outbound segment which would trigger a refare. With the legacies you usually can change the return for the change fee alone.

I suspect WN gets a lot more speculative bookings than the legacies due to having no cancellation penalty. Plus no free standby unless you’re paying the full fare.

Benjamin Perley
Member

As for the change fee having no relation to the ticket price, that is just something we are going to have to live with. With no way to collectively raise fares, the airlines are going to have to get that extra $100 per ticket from the pax somehow.

Benjamin Perley
Member

I also suspect they collect a non-trivial amount of money off of the expiration of unused ticketless travel funds.

Wonko Beeblebrox
Guest
There are, I think, better options for an airline like WN than change fees. For example: – Keep open seating, but board based upon the fare paid (instead of checkin time). Higher fares board before lower fares. – Put in a set # of something like a Digiplayer for the longer haul flights. WN gets to say they provide optional entertainment and also saves the expense of putting the A/V in the seats, and they can change the number of them on any given flight very easily. – Offer their own form of “travel insurance”. IE: you can choose to… Read more »
SAN Greg
Guest

No change fee on SWA? Boy do I feel like a chump! Ignorance is not bliss. 25 bucks is more than fair. I don’t see them losing any loyalty over this. Where will people run to? $150 United?

Mark
Guest
I really love the “no change fee” at Southwest. Of all the a-la-carte fees (bags, pillows, food, etc), the change fee is the worst and I hope that Southwest never never never adds one. $25 wouldn’t be a killer, but, as Wonko says above, $25 becomes $50, becomes $100, becomes $150. In today’s computer and web world, it is not like years ago where there was some real labor cost to making a change. Almost all of my changes are done on the web site, so the transaction cost is almost nothing. And, Southwest does get the fare difference. Consider… Read more »
Get A Trip
Guest

If this is the extent of Southwest airlines supplementing new charges, a simple $25.00 “change” fee, then it is hardly worth mentioning. Though like many airlines they will initiate an increase in fees, in small increments, to “test the waters” so to speak, testing public resistance and public awareness. By doing this it make it easier down the road to continue to hike up their rates or do add on fees.

Bob G.
Guest

As a LUV stockholder, frequent Southwest flyer and 4-time companion pass holder, I strongly disagree with your suggestion to add a change fee. Southwest is a different breed of airline. The long-term value to the brand of beign easy to deal with is huge and far outweighs the short-term value of adding fees. Long story short – DON’T DO IT LUV!

tusphotog
Guest

I fly at least one round trip on WN a week, sometimes two r/ts a week. If they do a change fee of any amount, I’m gone. For good. I change several flights a month, 90% of them go from the $49/$59 fare bucket to the full fare of $200+. If they want to charge me $25 to do that, I’m flying Alaska where I will have Gold status and not have to pay the fees.

Robert S
Guest
Some of WN’s ticket revenue would disappear with a change fee, even at $25, for a reason not yet discussed here: some WN trips are booked with the expectation that they will likely, but not for certain, be completed. These are trips such as visiting family/friends where the traveler or visitee might later find they have to work due to a deadline, or travel by someone who falls ill more often that most, or by a self employed, self paying traveler with business plans that will usually but not always pan out, and the like. You could consider these “speculative”,… Read more »
tep2
Member

CF–Thanks for the opportunity to clarify/amend my prior post. Both jetBlue and Alaska Airlines have $0 REBOOKING fees. As used here, both charge on the order of $100 for a complete change to a ticket previously purchased although same day and standby changes can be made at reduced fees ($0 in the latter instance).

The Traveling Optimist
Guest
The Traveling Optimist
NSX – Agreed. A nominal percentage of the full fare would be more acceptable than charging rack rate just to stand by. Of course, that’s still thinking from the revenue optimization perspective and it presents a gambler’s payback: does the customer get his/her fee back if they don’t make the flight? When and how that plays out wouldn’t necessarily delay the flight but resolving the matter would certainly take up staff resources short of automating the entire thing. Further, the fee would have to be loose enough to allow standby on any flight on, say, the same day; otherwise the… Read more »
Ron
Guest
I haven’t seen anyone mention the capital implications of the no change fee policy. My mother in law flies about 6 times a year cross-country on Southwest, and typically books a few cheap tickets on alternative dates for each trip. She then plays the usused credits game (or whatever you call it), but at any point in time she has a few hundred dollars or more “invested” in Southwest — that’s like a permanent, interest-free loan. Since she is a fairly discretionary traveler, it’s safe to say that even a $25 change fee will make her stop all this multiple… Read more »
SEAN
Guest

Here’s an idea charge a $100fee to first go through security. Then charge $100 to enter the concourses. Next charge $100 to use the jetway to board & again to disembark the aircraft. finally charge $100 to enter baggage claim . All fees are per person & no ecceptions of any kind are granted. the airlines & opperating authorities would be rolling in dough.

asad
Guest
The reason I fought with our corporate HR droids a few years ago to be able to book SW was because of the no change fee, if you are in sales and cover the Vegas, Phoenix, San Francisco areas out of LA you fly with SW because of the high number of flights on those routes. I would routinely finish a call early or late start to drive back towards the airport and call SW to change my ticket or just go in and walk up to the counter for the next departing flight. Since I always paid full price… Read more »
The Traveling Optimist
Guest
The Traveling Optimist
Ron – To answer Question #2: You’ve heard the term “buckets” when referring to fare classes. For Southwest and the sake of simplicity let’s say each flight (all coach) has 5 buckets and each bucket has only one class. Further, each bucket is authorized to sell a certain number of seats. Finally, to the right of that is the number actually sold. San Diego to Nashville Bucket Auth Open B1 = Y 160 120 B2 = B 135 105 B3 = M 110 60 B4 = R 75 5 B5 = T 30 -10 See what happens? Once the 30… Read more »
MathFox
Guest

SEAN, do you work for Ryanair? They have the guts to ask you £ 5 for printing your boarding pass at your computer at home (and more when you have them print it at the airport…) Many of the fees you mention are already rolled into your ticket price, as airport/passenger/security fees and encourage passengers to consider alternate airports.

Neoncactus
Guest

RE: Upgrade to full fare to enable stand-by travel on a different flight.

What is hard to understand about this SWA requirement? If you want maximum flexibility, but a full fare and you can go stand-by on any flight you choose.

Discounted tickets come wtih restrictions on all airlines – always have, always will. You want flexibiity you must pay. This has been the case since the Airline Deregulation Act of 1978.

The airlines have different ways of approaching flexibility but I happen to think SWA’s is the best. Especially their full-fares are generally lower than the competition.

Oliver
Guest

Hey Cranky,
I really think you’ve got this wrong. A change fee will really peeve many many customers–myself included. No change fee is one of the reasons why so many people choose Southwest Airlines.

SEAN
Guest

NeonCactus,

No I’m not employed at RyonAir. I just tried to inject a bit of humor.

PFR
Guest
I fly SouthWest at least one RT/month. While a $25 change fee wouldn’t drive me away (where would I go?) it would certainly shift me from a someone who loves the airline and sings its praises to one who merely likes it a lot. I think my high level of customer goodwill may be worth more to them than the occasional $25. As some have observed, I’d also be less likely to book trips out 2-3 months ahead, as my work schedule changes frequently and I really appreciate the flexibility of moving trips around by a day or week with… Read more »
Oliver
Guest
Hey Cranky, Revenues are always worth considering…but at what cost? The reply by PFR raises a good point about customer goodwill. Even with a potentially small change fee, I believe I would continue flying Southwest. But my praise for them as a friendly airline with respect to the flexibility and change fee will fade away. Word of mouth is sometimes the best way of stirring up business and building trust for a company’s services. I always praise Southwest for this flexibility to my friends and other people I know who travel. You take away customer goodwill towards a company, then… Read more »
kaszeta
Guest

I easily agree that, in general, a $25 change fee is good low hanging fruit.

However, I’d definitely make sure that “no change fee” was one of the benefits included in “business select” fares. It seems a reasonable perk for them to keep with that level of ticket.

nsx
Guest
My typical ticket price on Southwest is $60, tax included. Compared to that, a $25 change fee looms quite large. I wouldn’t switch airlines, but I really wouldn’t like it. If Southwest thought that customers were upset at the loss of double Rapid Rewards credits and the imposition of capacity controls on RR awards, those would be nothing compared to the outcry if Southwest began charging change fees. The only way this might be a win for Southwest is if Southwest were to announce change fees, wait 3 to 7 days for the media wave to crest, then reverse course… Read more »
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