Just last month, United increased its change fee on domestic flights from $150 to $200 and I bashed the move. That, of course, didn’t prevent US Airways, Delta, and then American from following like sheep. Those increases left a bigger gap between change fees at the legacy airlines and those at the low cost carriers. You can see where this is going right? Yes, JetBlue has now increased its change fee, but it didn’t just use a blunt instrument. It used a little finesse to make it easier to explain to travelers.
Previously, JetBlue had a tiered change fee based on the price of the ticket. Now it’s keeping that structure but adding an extra tier. And fees are going up. Here’s how it breaks down:
|Ticket Price||Fee If Ticketed|
Before May 17
|Fee If Ticketed|
on or After May 17
|$100 – $149||$100||$100|
|$150 and up||$100||$150|
As you can see, this means the fee now tops out at $150 whereas it was only at $100 before. For everyone except those who bought tickets worth between $100 and $149, the fee will go up. Well, for the most part, at least.
The fee itself is based on one way fares. So let’s say you bought a roundtrip ticket made up of two one ways of $80 each. Even though the roundtrip ticket costs $160, the fee will be only $75 because the two one way fares were less than $100 each.
Complex? Yes, but JetBlue doesn’t even need to explain that last bit. The benefit always goes to the traveler in the form of a lower fee than what’s expected. So just publishing the three tiers and then having a few people surprised by lower actual fees isn’t bad.
But hold on. There’s nothing new in this that’s great for travelers. Yes, the tiered structure makes more sense. It prevents travelers from being in a situation where the fee is $200 on a $100 ticket, as we see with the legacy airlines. That means people won’t just throw the ticket away, but that’s not a new thing. There is one other piece to this change, however.
JetBlue is now also introducing a variable change fee depending how far out you are from the date of travel. If you make a change 60 days or more before departure, it’s a flat $75 regardless of the price of the ticket. The tiered structure only goes into effect if it’s within 60 days of travel. This is what I really like about this change.
The legacy airlines look at change fees in a fairly one-dimensional way – will there be a net increase in revenue after the change is made? JetBlue, however, looks at the narrative as well. How can it justify the change to a consumer? Will it be something that the consumer will understand and accept?
With this move, JetBlue can tell a story. It can explain how when people change further in advance, there’s a better chance that JetBlue can re-sell that seat before departure. So it will charge a lower penalty when that happens a couple of months out, but when it gets closer JetBlue will charge more because it becomes harder to re-sell the seat.
It sounds good, so consumers are more likely to accept it. And the reality is that it will likely cost JetBlue very little in revenue. How many people make changes more than 60 days in advance? It can’t be that many in the scheme of things. Most changes happen closer to departure. So the number of people who can actually take advantage of this lower fee will be minimal, but it will still benefit the brand to have it out there.
Good work, JetBlue. You found a way to increase your change fee in a way that’s more consumer-friendly. It also will result in a big increase in change fee revenue. Nice job.