Southwest Restricts Unused Tickets, I’d Rather See a Change Fee

It looks like the good folks at Southwest have slipped in a little change to your ability to use ticketless travel funds. As with any change, that has some people unhappy. Instead of being Southwest Funds Rule Changeable to use your funds for anyone to travel, you’ll only be able to use it for yourself. I’m not a fan of this move.

A friend of mine sent me the news when he saw the story on FlyerTalk. Beginning January 28, 2011, funds that are in your name can only be used when you travel on Southwest. The way it is today, if you have a credit, you can use it for anyone.

Let’s say you booked a ticket to Birmingham, Alabama (not sure why you’d do that, but ok) and then found you couldn’t go at the last minute. We all know that Southwest has no change fees, so the amount you paid for that ticket goes into a credit that you can use on Southwest within one year of ticketing. The beauty of those credits is that you can use them for other travelers and not just you. So if I don’t have a reason to use it, I can offer it to my dad or to a friend. I’ve actually done that before where an expiring credit would have simply disappeared so I gave it up to someone else.

That luxury is going the way of free airline meals. Now you have to be the one traveling to use the credit. That sucks. I think we all understand why Southwest would do this. Without being able to transfer the credit, more people won’t be able to use it and Southwest will get to keep the money. It also eliminates any black market that may have been out there to get some cash for credits that would have gone unused. So this is a revenue-generating move, but I think there are better ones out there than this.

I’ve said it before and I’ll say it again. I think Southwest should have a change fee. Just put a reasonable $25 fee on there and the airline can start raking in the dough. It can also eliminate a lot of the uncertainty out there. If someone really needs to make a change, that person would pay $25. It would hurt those who just book for the sake of booking a cheap flight and then bank the credits later if they don’t take the flight.

Why do I like this better? I think it’s more flexible and useful. I know there is always an outcry when I mention a Southwest change fee, but if you could share your credit with someone else for only a $25 fee, then it would be better than not being able to share it at all. I know Southwest hates change fees, but there are only so many messages that an airline can promote. It’s been almost entirely about bags flying free lately and that’s a good campaign. Why not keep the focus on that. It’s not a conflict because a $25 fee would be fair.

This, however, isn’t happening anytime soon. And that’s too bad, because I find a change fee to be more palatable than a restriction on credit use.

[Original photo via Flickr user flygraphix]


44 Responses to Southwest Restricts Unused Tickets, I’d Rather See a Change Fee

  1. SW Flyer says:

    So … it sounds like you would rather incur a transaction fee — maybe you should face reality and see what their competition is doing. Following your logic maybe SW should just decrement the funds by $150, like the other airlines, just for a change with no flexibility on credit use. SW has been generous in allowing the flexibility to change flights without additional fees.

  2. ILUVBHM says:

    Hey, now, there’s a lot of good reasons to book a ticket to Birmingham, AL.

    • ILUVBHM2 says:

      Reasons:
      1. Dreamland
      2. UAB Hospital, Worldwide leader in heart transplants, maybe related to eating at Dreamland to often…

  3. Mike says:

    I don’t know.. it sounds to me like they’re just leaving a lot of revenue on the table by NOT doing this.

    Not to mention, I can’t think of a single airline that still does this practice. I think it makes them more industry standard. I don’t really see a problem with that

  4. Airline industry groupthink is all about the fact that you are “leaving money on the table” every time you fail to charge for anything and everything. To attract actual customers, you must think like one.

    Think like a customer, and you will realize that they will be far less hesitant to part with their money when they know that they can change plans without penalty. Why do you think almost all retailers have return policies on goods when they loose money on each return? It is because retailers understand that the profits earned by customers who will make a purchase because they have the option of a refund (or store credit) exceeds the losses incurred by those who actually return items. Without a refund policy, customers walk out the store and shop around. The analogy is actually weak because the marginal cost of an airline customer who changes their ticket online is close to zero, while returned goods loose substantial value. In fact, Southwest makes money when customers repurchase at higher fares for travel with limited advance purchase.

    Southwest has always differentiated itself by not succumbing to airline groupthink. This new change by itself is not a huge deal, but if it is a signal that they will start acting like so many customer unfriendly, and unprofitable airlines, they are heading in the wrong direction.

    • Sean S. says:

      Nonsense. Hardly anyone but business travellers part with their money with the expectation that the ticket is refundable; at this point everyone accepts the lower cost of a non-refundable ticket.

      Comparing the airline industry to retail is absurd. The comparison would only be logical if retail stores sold the same product to different customers at various price points. they don’t, and thats why airlines are hit so hard by cancelled bookings. That ticket not only could hav ebeen sold to another customer, but it would have also been sold to a customer at a higher PRICE. No sane person would allow that to happen.

      • Actual customers make decisions based on refundability, whether or not you think it is nonsense. Business or leisure travelers often choose Southwest because of their no change fee policy. Reduce the refundablility of your product or service and you reduce it’s value and you will loose loyal customers. Increase options such as refundability or future flight credit and you increase your product’s value and attract loyal customers. That has obviously been Southwest’s strategy.

        You clearly do not think like a customer.

        • JamesK says:

          Or is it more like a Super Wal-Mart that sells tobacco and alcohol products as well?

          Wal-Mart has a pretty generous money-back return policy, but state laws in Georgia forbid the return of alcohol or tobacco products. They have to uphold this draconian policy just like the rest of the retail industry. However, if I accept the fact that some of the items I can buy at Wal-Mart are returnable but others aren’t, would that make me more or less likely to shop there than at a store that allows returns on very few products?

          Yes, thinking like a customer, I do think there’s a point to which WN can begin to add little fees or more restrictive policies, and as long as they are less strict than the competition, they will still be perceived as the “good guy airline”. A $25 ASC for a rebooking policy as generous as WN’s is still a lot better than what you get for $150 from the majors.

          • JamesK says:

            Sorry, I meant to say that even if they add an ASC to the new policy, it’s still a whole lot better than the deal you get on the competition.

  5. Joe says:

    This rule was already on the books. This announcement is not that Southwest is actually changing the rule, it is that will be enforcing the existing rule regarding “nonrefundable tickets” in their Contract of Carriage (pg12). It was nice of them to give everyone ~6 months give their credits to friends and family (or go to the black market).

  6. DGS says:

    I’m just glad that the endless barrage of “Bags Fly Free” ads have stopped for now.

    Although, with football season only about six weeks away, I fear that they’ll be back soon.

  7. I see nothing wrong with making the funds only usuable by the person who purchased the ticket in the first place. But it would be nice if they could still use the funds for a spouse/partner and their kids.

    Maybe this is just a step towards one day charging a change fee. Baby steps as they say.

  8. Joey says:

    As soon as Southwest heads down that slippery slope, the sky is not the limit (pat myself on the back for that pun).

    SW is the leader in differentiating itself along the lines of customers over fees. However they want to do it is alright, as long as they don’t add fees. The concept/word/PR/marketing of fees, needs to be used very sparingly by Southwest. Let the competition do it.

  9. Steve says:

    I completely disagree. I find the SW policy the MOST liberal of all! I don’t care that I can’t use the fare for someone else. Let them get their own ticket. I want access to ALL the funds I paid, not minus $150!

    • Ritz Tours says:

      I agree with Steve on this. They’ve already got such a liberal policy and if you purchased them before, you’re bound to fly them again so how does this affect you really? As long as I have a year to rebook, I’m happy. No extra fees please.

  10. Larry M. says:

    For code shares to work, you must have similar policies about ticketing and refunds (and use of unused ticketless funds). It really is that simple.

    Also, Joe is correct… WN has been making exceptions to the policy for years.

    Code shares and future security measures will force all airlines to be more consistent in how a number of things are done.

    • N370z says:

      Security???!!!!! What in this post-911 world does this have anything to do with security?

      Security??? We’re talking travel credits here and you’re bringing up security???

      Oh, I see, Southwest is changing this policy regarding unused funds out of an overabundance of caution.

      Security???? Sheesh.

  11. John says:

    Crankster, I humbly submit that on this one you are wrong. Change fees are bad (as a flier) I fly WN because they dont have a change fee. I could fly US nonstops out of PHX, but 60% of the time I figure I will have a change, and I wont fly them because of the intense pain of paying them an extra $150 on the change.

    If WN goes the way of change fees, however small, it will be so very easy to raise the rates until they are like all the rest and then they lose their cachet. I agree that taking away a feature is unpleasant, but FAR less unpleasant for the majority of fliers who need to make a change.

    Southwest, keep it up, no bag fees and no change fees (we LUV it!) … and while you are at it add a couple more seats to TUL for Rapid Reward redemption at Thanksgiving! Thank You

    • IHSW says:

      “Southwest, keep it up, no bag fees and no change fees (we LUV it!)”

      Aren’t you a little embarrassed to be a grown adult (I assume) parroting marketing bullshit? I mean, seriously.

      The only thing less tolerable than WalMart Airlines are the psychotic moonies that fly with them.

  12. Mark says:

    But why would you want to be “industry standard” when the inverse has been what helps you stand out and sell more tickets? IMO, Southwest has been successful as an airline for one reason and one reason only: bucking the tide. SWA has never followed the industry current, and customers have rewarded them with their wallets.

  13. clay says:

    you’ve got to be kidding… you would rather have a change fee than a reasonable pricing scheme…. i fly them most every week and enjoy the flexibility that their price policies allow.

  14. David says:

    They could go half way with the change fee thing. Add an option to the new policy: For something like $25 they could allow one to change the name on the unused tickets. It wouldn’t be a change fee in the traditional sense but still would help them retain some of that revenue.

  15. Don says:

    I agree with — There should never be a change fee — when I give up my “Cheap” ticket and buy another ticket for the going price — the airline will resell that same “Cheap” seat at the then current higher price. Also, there is no human interface when I do it online.

  16. JayB says:

    Never say never with WN. I see they have decided to participate in the feds’ contract air fare city-pair program. Fixed fares for 1-year peiod (Oct. 1, 2010-Sept. 30, 2011), no blackout periods, last-seat availability, no cancellation fees. 4,299 domestic city-pairs; 1,423 international pairs.

    WN was the winning bidder in, I believe, 305 city-pairs. For example, BWI to DEN: $149 YCA (no capacity-control)/$119 _CA, (capacity-controlled); to PHX, $370/$229; to LAS $349/no _CA.

    All 4,299 domestic city-pair fares/1,423 international city-pairs, for the 13 contractor airlines, including new this year, CO (int’l only) and HA, are listed at gsa.gov. Program is said by GSA to cover 10 million fed employees/contractors’ seats for the year, with bookings, on average, 13 days in advance of travel.

    Kind of thought WN would never participate in this program, “Hey, we’re WN: we’re different” but they decided to, just like everyone else!

    • David M says:

      Southwest hasn’t participated in the past couple of years, but they have in the past. You can access the old awards off the GSA site as well in an Excel spreadsheet. I looked at FY06 and found 328 rows with WN as the carrier. HA had contract awards that year as well.

  17. BW says:

    Personally I don’t like change fees either but when you really think about it most airline change policies are actually pretty forgiving, and Southwest’s policy is extremely forgiving.

    The business model is more similar to something like a baseball team than a retail store. If you buy a ticket and you can’t go, they usually don’t give you your money back or let you go to the next game for free. The only difference there is that you can resell your ticket yourself.

    Why should the airline be expected to eat the cost of an empty seat because you aren’t going to fulfill your end of the deal? The ideal scenario would be that if the airline is able to resell your seat then you get your money back. There would be all sorts of issues with implementing that.

  18. I couldn’t disagree more with your blog entry today.

    There is no reason to start down the fee road for WN. I can’t understand why you would rather pay a $25 fee to give away your money than to keep your money and have to use it on yourself.

    The thing that makes WN so attractive to so many of us is the fact that we won’t lose any of our money when we make a change. For example let’s say I purchased a ticket from HOU to ABQ and back three months from now and it cost me $250.00. Two months later I am unable to make that trip for whatever reason and cxl. A week later I need to book a trip to STL and use those funds to purchase the STL trip. However, the fare to STL turns out to be $15 cheaper. Under your suggestion I would have to pay $25 to change and then would lose out on the $15 due to the cheaper fare. So in the end your change fee is really a net loss of $40.

    Thanks but no thanks. Let’s let the wonderful guys and gals over at WN do what they do, they certainly don’t need our help in running a successful operation.

  19. Travel Agent CJ says:

    I know that as a Travel Agent, a lot of my clients buy personal travel on WN knowing that if, for some reason, they can’t use the tickets, they can always use them later for family to come out to see them if they can’t go home. I think it will be a shame when WN institues this policy. One more of the “good guy airlines” starts down the slippery slope to where all the rest ahave ended up. What a shame!!!!!

  20. Robert S says:

    I’m personally fairly addicted to WN’s no change fees, and I fly enough that this new nontransferability won’t hurt me. While I think it makes little sense to have a change fee for changes made weeks before departure (since there’s plenty of room for the airline to resell the seat), while a change fee for last minute changes would be more fair because it’s often too late for the airline to resell the seat.

    • JamesK says:

      To this point, is passenger A who is changing his ticket back and forth constantly punishing passenger B who doesn’t change her ticket at all, but ends up paying a higher fare because A happened to decide to grab it one day and give it up the next?

  21. Michele says:

    I understand the policy SWA will implement; and, for the most part, I probably will not be affected by it. I do, however, have a question about using Reward flights.

    I used a reward flight to have a friend visit me. The SWA Awards Notifications still say
    “GIVE AWAY YOUR AWARD.
    “Simply find out the destination, travel dates, and times from your lucky recipient.”

    I know we can’t peer reliably into the future; but are there any possible “interpretations” of this new policy that might extend to award flights?

    Thank you Cranky.
    Love what you do.

  22. David Z says:

    One other drawback to this policy is if the cardholder paid for someone else’s tickets, then the traveler can’t fly within the ticket’s valid period. Stopped counting how many irate people our company got when told they can’t use tickets they paid for someone else booked with other airlines like DL and UA.

    Unless I maybe missed it, so far their blog hasn’t said anything about this.

  23. Scott says:

    This is a very small change, and I don’t think it will affect the majority of Southwest customers. However I can say I have heard nightmare tales of people with credit offering to book flights for people on craigslist, then cancelling the flights after they get wired the money. The biggest problem was there was no way to secure funds. Anybody who had the record locator had access to the funds. You could literally find a confirmation e-mail on the street, call in and use the funds to book a ticket for yourself. The move is a step toward helping protect customers from theft and dishonesty.

    • CF says:

      Wait, don’t you work for them? That might be a helpful disclosure. I can’t imagine this is being done by Southwest out of the kindness of their hearts. This has to be a revenue decision.

    • M3Pilot says:

      We need to be very thankful to “Scott” for I’m very careless with my confirmation e-mails, I leave them at the bar along with my credit cards. And then I troll the gate areas and boarding queues to take note of names and PNR’s….all those stolen TTF’s have been funding my travels over the past few years.

  24. Scott says:

    Fine. Full disclosure. *I work for Southwest Airlines but the snarky, poorly expression opinions here are only my own.*

    Revenue is a big part of every decision. We’re not running a charity. I’m not partial to the numbers but I can tell you the decision to limit the transferability of funds is not some sort of underhanded money grab. We’re not behind the curtain cackling that you can’t use your funds anymore because we’ve made them nontransferable. We’re not sitting with bated breath hoping you’ll cancel your flight so we can keep your money without providing service in return. We’re responding to the fact that people get crazy with their funds, and it’s time consuming and costly to deal with.

    And true, there are analysts who think we could rake in the cash by charging change fees, who claim we’re just leaving money on the table, but that would a little bit *too* much like other airlines. And if we did that, our share of domestic traffic wouldn’t have increased nearly a full percent in 2009.

    • CF says:

      Just to be clear, I have no problem with you working for Southwest, but if you’re going to chime in a Southwest-related issue, I think it’s helpful for readers to have insight on where that comment is coming from. It adds validity to your point, I think.

      If this is the real reason, it again goes back to the “technology issue” problem that has plagued Southwest for years. If the systems can’t handle this sort of flexibility, the it’s time for a new system. I’ve been amazed at the glacial pace of change in Southwest’s IT. Codeshares have been in progress for years. So has the Rapid Rewards redesign. It almost seems like they need to blow up the IT department and start over because things aren’t moving along.

      • Kate says:

        I have no idea if it’s a technology issue or not, since I don’t know their technology, but just casually thinking about it: it has to be fairly complicated to keep track of funds across different passengers and different payments and tickets. Especially if 15$ here and 10$ there and exchanges/reissues going back to calculate original value and used value, tracking pack to original payer, etc etc.

        Probably a smart move on their part to simply that part, and leaving their ‘no fee’ part alone.

    • M3Pilot says:

      “We’re responding to the fact that people get crazy with their funds, and it’s time consuming and costly to deal with.”

      Who are you trying to kid? It’s only time consuming for us to track them. Otherwise, they just sit in your system and you cash them in if they sit there for over a year.

      What may be costly for you to deal with is the “lost” revenue when we re-use TTF’s for/from other people. However, without that TTF flexibility, WN would not have that money in the first place.

  25. No Change Fees!
    I hate change fees more than anything else in travel. They are a 10 out of 10 on the pain scale. I mostly travel from BOS to WAS, and one reason I’ve switched to WN is its friendly no change fee policy.

    Change fees are a slippery slope. In 5 years your $25 fee will be $50, $75, $150, or what? Remember the legacy carriers started out at one point with a $25 change fee that became $35, $50, $100, $150.

    I agree the new TTF rule isn’t good. I would say 8 out of 10 TTF’s are mine, and 2 out of 10 times or less I might be trying to use another named pax’s TTF. However, a change fee would have been an exponentially worse and consumer unfriendly move.

    Also even the $25 fee would add up for very frequent flyers.

    I think WN should further highlight its no change fee policy! I don’t thin your “average person,” understands the difference between WN’s change fee policy and that of nearly all the other carriers. They could really go to town if they advertised the $0 vs. the typical $150 change fee. The change fee is significantly more a concern than bag fees for me.

  26. FamilyMan says:

    As a husband and father who HAS TO LIVE in another state for his job, to help support his family while his wife lives and works in other state, too far away to drive to/from, I can FULLY attest that THIS SUCKS ROYALLY!
    Often, if I can’t make a trip for some godforsaken reason, I can at least get my family out to me later, or get my family out to see other family, or something similarly decent. I book my travel FULLY in advance (as far as is available), so if I can’t take a flight for some reason, I’m STILL SCREWED b/c I have very few other times that aren’t already booked! Right now, a medical emergency has left me with three TTFs and just now I found out that I am SCREWED out of using them for my family to come to me instead of me going there, as of less than 3 months from now. Thanks for making an already stressful planning situation all the more, all for the almighty damned dollar!
    THERE IS NO REASON OTHER THAN $$$$$ for making this change. The airline is already running the others into the ground, so this coldly and calculatingly victimizes a minority, but significant, percentage of their customers as expendable “collateral damage.”
    To all of the idiot talking heads who “HATE” fees – DON’T PAY THEM!! All that the rest of us SANE travelers are asking is for the OPTION to get around this BULLSHIT change in policy, even if by sliding them some damn cash (you say fee, I say BRIBE!).
    As for the lawyers and policy-wonks who say it’s been on paper for YEARS, you should also know, from law school or the real world, that when the ACTUAL IMPLEMENTATION is as it has been (TTF’s useable for ANYONE) for YEARS AND YEARS, then *THAT* is the policy – the action has overridden the paper by their repeated actions.
    For anyone who thinks that their ploy to be more “industry-standard” is a GOOD thing, go to hell – by flying UA, DL, US Air, etc. Southwest is NOT nor should it EVER be a follower, but the leader that has made it what it is today. The morons with their shiny new MBAs (I have one, so I can mock them!) that are now running the show, who forget this criticla history fo their new company, will make it another piss-poor US Air in no time.

    They were warned…

  27. Nick says:

    I agree with the poster! I purchased a ticket for my Father to visit me while my Mother watched my sister’s pets. Dad eventually got the flu and I wanted to reuse the funds to purchase a new ticket for my Mother to visit instead (same flight). Southwest said No! Then I asked, since its MY money charged to MY credit card can I use those funds for a ticket for MYSELF. Again, SOUTHWEST SAID NO!!

    Not very flexible at all. That money was eventually lost (I feel robbed!) and since then I’ve only flown on Southwest when my company pays for it.

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