JetBlue Demonstrates the Right Way to Increase Your Change Fee

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.

JetBlue Change Fee

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

Under $100

$50

$75

$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.

Get Posts via Email When They Go Live or in a Weekly Digest

Leave a Reply

49 Comments on "JetBlue Demonstrates the Right Way to Increase Your Change Fee"

avatar
Sort by:   newest | oldest | most voted
Shane
Guest
There was an excellent piece on NPR about the cost of ammo that applies to this situation http://tinyurl.com/acl7ccl. The supply for ammo is up and the cost is down, yet prices are not rising. The reason is that consumers are alienated and will change their purchasing habits if they feel that retailers are taking advantage of them versus a rational explanation of costs rising (increased materials costs, etc). This is somewhat applicable to the change fees and other fees. Consumers get upset and change their purchasing habits when they feel a fee makes no sense. JetBlue could gain customers because… Read more »
David SF eastbay
Member

It makes sense to charge someone less who changes four months ahead of their original ticketed departure day then a week before. jetBlue will make up some of that tier change fee money off of travel agents who don’t pay attention to the calendar and change a lower change fee when ‘today’ was really 59 days and it should be higher. At least hopefully when they own human agents get dates wrong they will not try and collect the difference later on. That Ryanair CEO would knock on your door at 3am to collect the undercollect $5 I bet….lol

Ron
Guest
Cranky, I believe your post is missing a piece of the story. My understanding is that JetBlue’s change fees are not only calculated on the basis of the one-way purchase price, they’re also collected for each one-way change. If I buy a round-trip ticket and need to change both legs (say the whole trip is postponed), then I will have to pay two change fees, while for the legacies I’d only need to pay one fee. As far as I am aware this was the case under the old system and wil remain so under the new one. So for… Read more »
Oliver
Guest

Might also be worth pointing out that Mosaic elites apparently don’t pay any change fees.

DesertGhost
Guest

It’s nice to see a little common sense.

tr5642
Member

The cheaper fee for long advance change is the most sensible thing I’ve seen in a while. As you say, it aligns with sensibility for the customers. Although, give real purchasing behavior, I’d suggest the boundary be 30 days.

tomhmartin
Guest

Initially, change fees were to cover the cost of exchanging paper tickets (remember those?). Over the years, the airlines figured out they could make money. All the change fees are outrageous in today’s e-ticket and internet world. I credit jetBlue for never bering a part of the pack!

Consumer Mike
Guest

It appears to me that the temptation not to participate in this free-for-all was to big to pass up this time. Action speaks louder than words. AND, when the airlines act it usually costs the flying public money!

mb5377
Member
Jet Blue did a much better job. United’s change fee is now $250 for some tickets. I just tried to upgrade a coach seat from S class to W class so that I could use an upgrade cert, space permitting. The increase in fare was $52. Add on the $250 change fee, and it would have cost $302 to keep my economy seat and have a CHANCE at an upgrade on a flight from LHR to SFO. They could have gotten SOME additional revenue if they weren’t so greedy with their fees. It really was an insulting moment – but… Read more »
Nick Barnard
Member

The tiered structure makes a lot of sense. I would’ve put more tiers in (time and prices) but this probably fits all of their needs pretty well.

CF, is there an inverse-Crankyjackass award?

Consumer Mike
Guest
It is very difficult for me to understand the total acceptance by Cranky and some blogers who cheerfully embrace this shake down of flying travelers. It is just another added rip-off by the airline industry to improve their bottom line. The actual administrative cost of changing a ticket cannot approah the escalating and obsceene fees being charged. It is pure greed, in my opinion. It might be better for a passenger who must chane plans to “bank” the value of his ticket – if possible – and purchase a new ticket, possibly on another airline. It may work out better… Read more »
Jason H
Guest

Don’t take it personally, but I have no idea what you are talking about. What exactly is your point?

Consumer Mike
Guest
Jason, I thought that I had made my point as clear as possible. However, in summary, I find it amazing how quickly Cranky and most of the blogers accept, without question, the frequency of new fees and the constant growth of such fees – way beyond the actual administrative costs, which I find unreasonable. My argument is, that unless the flying public stops meely accepting these new [fare] increases – which in effect is what they are – there will be no ceiling to this habit of milking the customers. The airlines are doing a good job in lulling consumer… Read more »
Jason H
Guest

How would you propose passengers ‘not accept’ these fees or fare increases, whatever you want to call them? Take Greyhound everywhere? (They have change fees as well for cheap tickets).

Everyone knows that it costs the airline less than $75 to actually change the ticket, but the point of fees is also to discourage bad behavior without being unreasonable. And this fee from JetBlue is not at all unreasonable.

1js7371
Member

How to avoid the fees? That’s simple: FLY SOUTHWEST!

Consumer Mike
Guest
When a traveler must use an airline there is almost no escape from being hammered by the escalating fees and fares. That is a fact. The point I was attempting to make is that consumers do not have to accept the increases in silence, which is why I voice my opinion to Cranky. The airlines are very sensitive to public perception of their credibility, reputation and competitiveness. How many times have you seen United/Continental kick off a fare increase, only to see it collapse when the competition doesn’t join the increase? The answer is countless times. Public pressure can make… Read more »
Nick Barnard
Member

Mike, which would you prefer higher fees or higher fares?

PeopleExpress back in the day used to have really customer friendly policies as far as reservation cancellation, and to be able to ensure a full plane they had to overbook pretty aggressively, which resulted in them stranding lots of passengers.

Consumer Mike
Guest

Nick, if an airline pulls more money out of your pocket to get from point A to point B does it really matter what the airline calls it? Some people and companies are good at plying games of symantics.

MeanMeosh
Guest
While I hear what you say, the reality of how most “consumer advocates” out there is completely different. I’m willing to bet money that the same watchdogs who complain about fees are going to be the same ones decrying the “windfall profits” of the airlines when the government mandates Economy Plus seating for all passengers, a free checked bag, a free meal, free advanced seat assignments, etc., and then raise airfares $75 or whatever one way to compensate. You may be different, but I’ve seen far too many who seem to think they can have it both ways – no… Read more »
Consumer Mike
Guest
While I respect your opinion I personally believe that attempting to confuse and hide fare increases, by calling them “fees”, makes it harder for the consumers to easily compare fares. Thie ie exactly what the airlines want to achieve in order to side step federal pricing laws. People who meekly accept these frequent increases, without negative feed back, are only inviting more and bigger fare/fee increases. As a person who travels frequently I know I have to be reasonable about certain fare increases to cover inflation or the rising costs of fuel or labor, as an example. However, one can… Read more »
Nick Barnard
Member

CF has been an advocate of good tools to be able to say “I’m flying, I want 1 bag, extra leg room, and I’m an elite on Delta” and get a good price comparison. The fact that price comparisons are hard are the *sshole GDSes that are running Ads that airlines should be forced by the government to work with their antiquated systems.

If you’re making the argument fees are an offset as a way of avoiding government taxes, thats a potentially open question, although at this point some of those fees probably should be taxed.

Consumer Mike
Guest
Nick, I agree, Cranky has been a great advocate for many consumer and general common good issues and needs for the flying public. No doubt. The government did get involved with making airlines properly state the full price of a ticket, after continuing abuses in airline fare advertising. BUT, leave to good ‘ol American business enterprise to think up of a way to continue to distort the true cost of flying their airline. BINGO! Fees and more fees!! These are not included when normally comparing the numbers on fares. This is what I am focusing on, Nick, as well as… Read more »
Consumer Mike
Guest
OK Cranky, we have a long history of agreeing to disagree on this topic, so here we go again. Yes, I shop for the lowest fares, which may work for me, when ever I fly, as I hope everyone does. Naturally some of the fees are optional, such as changes. Some are not, such as baggage fees, and some airlines have started chaging for advance seating assignments or even aisle seats. Fees are like a cancer, they continue to grow. In my opinion ALL fares should be transparent and not leave the customer guessing the true cost of flying. Perhaps… Read more »
Nick Barnard
Member

The government did get involved with making airlines properly state the full price of a ticket, after continuing abuses in airline fare advertising.

AFAIK this was that the airlines had to advertise the government mandated fees and taxes. Airlines are one of the few business that have to advertise government fees and taxes into their prices. The only other examples that come to mind are gasoline and parking. When a store advertises a taxable item they don’t have to include the tax in their advertised price, so why should airlines?

Consumer Mike
Guest

Nick, apart from bottle deposits I cannot think of any list of fees that might be added to store purchases. I know of no store with a litany of fees such as those in the airline industry.

Nick Barnard
Member

Mike, the fees and taxes that must be advertised fare are government mandated. So why should they have to list taxes in their price when other businesses don’t?

Consumer Mike
Guest

Nick, Obviously because enough consumers complained to the government about the confusing fare structures or misleading advertising. In my opinion the government did a good thing to help in attempting to better compare the true cost of a ticket.

Nick Barnard
Member

Mike, but every airline had to charge the same fees. So it isn’t like it helped you compare the cost of a ticket.

Consumer Mike
Guest

Nick, I do not believe that is correct. Every airline may have similar taxes, based on their fares, but not every airline has the same fees. Think baggage, advanced seating, exit aisle, etc. And previously the added tax was not included in the posted price and some people were therefore not expecting the added cost to their ticket.

Nick Barnard
Member

Mike, the airlines only had to advertise mandatory fees. Per: http://www.pillsburylaw.com/publications/update-us-department-of-transportation-advertising-guidelines-2012

“All advertised and quoted air fares must state the entire price to be paid by consumers, including all taxes, fees and other mandatory charges collected by sellers of air transportation.”

Most of those mandatory fees are mandated by the government in one way or another. All the other fees airlines charge are optional in some way or another. (Even if it is something asinine that you have to purchase your ticket in person.)

trackback

[…] commentators have been praising JetBlue for its seemingly more fair tiered system (see Cranky Flier?s post and One Mile at a Time?s post for more […]

Consumer Mike
Guest
DEAR ARUBAMAN, You got me on this one. As a flying customer I vote with my dollars. As much as I like to fly as economically as possible, I draw the line in joining a cattle drive to get a seat on SouthWest. Unless there is a vast difference in fare, I will pay more to fly in a more civilized manner. The last straw was when I boarded a SW flight and got into an argument with a rather large lady who would not let me take a seat as she was “HOLDING IT” for her family! I have… Read more »
1js7371
Member
ConsumerMike…..Right on, brother. I feel your pain. Things don’t always go right. Last year, WN flew over 100 million domestic-only passengers. That’s a lot of folks, win, lose, or draw…….I agree, WN is not always the CHEAPEST TICKET, but the fact that Southwest Airlines was voted Best Brand of any company in ANY sector in the United States last year could well indicate that they remain the BEST VALUE in the industry……..I believe I recently read in “The Wall Street Journal” that although WN only controls 23% of the domestic market, it still has the lowest fare 40% of the… Read more »
Consumer Mike
Guest

Arubaman, Just a note of interest, which CF is aware of; This week CONSUMER REPORTS issued the results of a study which rated VIRGIN AMERICA the best domestic airline and SW and JETBLUE sharing 2nd place. Also, the fee happy airline SPIRIT came in dead last IN EVER category in the study. CONSUMER REPORTS states the your ticket on SPIRIT buys you only a seat on the aircraft – NOTHING MORE! It appears that it is actually a worse airline than RYAN AIR, which I personally thought was impossible.

1js7371
Member
ConsumerMike…..Your point of who’s in first (VX) and who is in last (Spirit) is exactly the opposite of who is generating the highest returns (Spirit) and who is losing their shirt (VX). As Mr. Cranky correctly noted, VX is whistling “Going Public” while it creeps past the graveyard! Spirit, conversely, is pissing people off 150 at a time on its way to the bank! A convoluted industry, for sure……….I personally agree with the poster who calls for TOTAL TRANSPARENCY on the REAL cost of travel. All other things being equal (which, admittedly they aren’t across carriers) the airline that people… Read more »
Foolmother
Guest

One other thing to consider is that Jetblue never oversells its flights. The change fees may help offset when people change at the last minute or don’t show at all. They do not sell that seat twice. Many people say Jetblue is leaving lots of money on the table, but it is philosophically wrong in Jetblue’s eyes. People don’t buy a chance to fly on their airline – they buy a seat!

tr5642
Member

Interesting. I hadn’t known that. But having lower/reasonable change fees encourages people to move flights around more readily rather than just last minute no-showing or rebooking.

Foolmother
Guest

Jetblue also does not charge for the first checked bag.

trackback

[…] JetBlue Demonstrates the Right Way to Increase Your Change Fee CrankyFlier […]

trackback

[…] of people who need to change that far in advance is small, but it’s still a nice gesture. Like JetBlue, Alaska is trying to create policies that make some sense to the […]

trackback

[…] blog post titled ?Jet Blue Demonstrates the Right Way to Increase Your Fees? posted on the ?Cranky Flyer? blog in May 2013. The blogger praises Jet Blue?s methodology chiefly because it is logical and […]

wpDiscuz