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 |
|---|---|---|
| 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.
49 comments on “JetBlue Demonstrates the Right Way to Increase Your Change Fee”
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 these changes make sense. If it cost $200 to change a $75 flight, then how could the airline sell you a $75 flight to begin with? That’s part of why people purchase Southwest when they are not the least expensive, their system is simple and makes sense (although that probably has more to do with IT than other reason).
Let’s face it, managing travel purchases has become a huge game with the rules changing daily to the detriment of the consumer. You need an actuary and crystal ball to figure out what your total cost of travel will be when comparing flight options.
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
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 round trips over $250, legacies’ change fees are actually lower if you change both the outbound and the return in one transaction.
Ron – That is not correct. I did discuss that with someone at JetBlue when I was putting this story together. If you are changing both directions at the same time, then the highest change fee will apply (as with every airline), but it’s only one change fee. So let’s say for example that you had a $75 change fee for the fare going out and a $150 change fee for the fare going back. You would pay $150 to make the change to both directions.
Thanks, and good to know — though they should communicate this better. Last time I booked with JetBlue I read their change policy and got the impression that each leg incurred a separate change fee.
Might also be worth pointing out that Mosaic elites apparently don’t pay any change fees.
Oliver – Good point, and one I forgot to mention. As does Alaska, JetBlue will waive change fees for elites now.
It’s nice to see a little common sense.
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.
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!
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!
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 then United does that a lot. Kudos to Jet Blue.
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?
Nick – Long ago, I used to hand out gold stars. Last one was in 2009, and I just never bothered to bring it back.
Ironic that your last gold star was to United regarding booking fees!
Ah, I guess you went from being mostly-Cranky Flier to completely-Cranky Flier. ;-)
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 financially, rather than get stuck paying a penalty.
It makes me sick to see the never ending uncontrolled increase or invention of fees. Additionally, it is very disappointing to see the positive approach CF has taken to this fee increase. The bottom line is still the same: FEE INCREAE! Does it really matter how many bullets the airlines use to kill the “Golden Goose”? The customer is still being squeezed by the industry more often and tighter and it will continue until CF and the paying public stop meekly accepting this form of fare hikes. The public is being lulled into following the increases like sheep to the slaughter.
Don’t take it personally, but I have no idea what you are talking about. What exactly is your point?
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 resistance to uncontrolled increases.
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.
How to avoid the fees? That’s simple: FLY SOUTHWEST!
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 a difference. There are times, such as when fuel prices go through the clouds, that most businesses must share those higher costs to survive. This is common sense. I am not targeting those decisions.
As you point out, it is common knowledge that the actual cost of changing a ticket is under $75 just high lights these charges even more when you have Jet Blue charging up to $150 and United $200! How can you figure that the Jet Blue fee increase is “NOT UNREASONABLE”??? It is my opinion that any airline that chages more than $75 for a change IS UNREASONABLE!
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.
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.
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 fees, AND no increase in airfare, which simply isn’t going to happen.
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 still shop for certain advantages in comparing fares, accepting no food or snacks of a flight and choose an airline that does NOT charge for advance seat assignments, or join a FF program that allows you to fly without the baggage fee.
A wise consumer can take some of the pain out of the stampede to invent or increase fees or more obvious fare increases, similar to a driver shopping for lower gas prices. Realistically, as long as one needs to fly, the airlines have you by the “short and curlys” and consumers just have to work harder to compare flying costs or, if possible, compare other ways to reach your destination.
Finally, I find it interesting that in your final sentence you don’t view added or increased fees as an increase in the airfare. I believe this is at the heart of our disagreement.
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.
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 the more frequent price increases in fees. The airlines have discovered a gold mine and are digging at it as fast and as much as they can.
As for the possibility of government taxing fees, just be patient. It may very well happen. This may not be all bad, as the added financial pain on the fees might bring the wrath of God down on this issue and the airlines if spot-lighted by more added cost. Then, the public will grab their pitch forks and pikes!
Consumer Mike – Ok, I can’t bite my tongue any longer because there are a few things to address.
That is not why airlines back off fare increases. They back off because if others don’t match, then they will be at a disadvantage. Why don’t others match? Because they make a business decision and it never is because of public pressure (or not that I’ve seen).
How is a change fee part of your fare? For many people, they will never have to make a change. This is purely optional.
This is the one that gets my blood boiling. Let me get this straight. You want the lowest fares around with no fees, right? You can’t have it both ways. The point is that having fees allows airlines to be profitable and charge lower fares than what they’d have to charge otherwise. Southwest doesn’t have the best fares because so much is baked into that rate. And if you don’t need to check bags, Southwest will often be more expensive. That’s the way it works.
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 a mandatory “menu” of sorts which AUTOMATICALLY is listed by the fares is the answer, instead of hunting for other screens for more pricing info. Currently, as you well know, you have to hunt on most web sites for the “optional” fee schedules. Not all customers are as well versed as you as to the fare guides.
Now, for the SW matter, I really am not concerned with the reasons that caused the price growth of the current fares on SW. In your blogs you have been kind enough to detail some of the reasons and I can understand what is happening. However, by coincidence, I was checking out fares from CA to FL last night and I can tell you, SW was not that competitive in the times and markets I was researching. Quite the opposite. Even though the current marketing policy of SW is to promote no-fee baggage, some of their fares still do not beat other carriers. Their grip on economy travelers may slip, once people truly weigh travel costs with todays SW fares.
Reasonable profits for any business is expected by any reasonable person. No business can survive losing money indefinitely. However, trying to take advantage of a semi-captive audience is nothing short of abusing the hand that feeds you. The pricing games that the airline industry is playing falls into that category, sorry to say. Nickle and diming passengers is a sure fire way to enhance a bad reputaion which airlines have well earned over the last few years. With the loss of more competition this abuse, I believe, will surely increase.
The only way consumers can make the best and most economic decisions out of this mess is to have CLEAR, OBVIOUS, FAIR pricing practices by the airline industry for easy comparison.
Finally, any public that accepts frequent uncontrolled and perhaps unreasonable fare (yes, this includes fees) increases without comment deserves what they will be charged. In my opinion blogers and certain media should not be so quick in embracing and accepting ANY unreasonable increases which only makes it easier for the next increase. FARES + FEES = TRUE TICKET PRICE!
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?
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.
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?
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.
Mike, but every airline had to charge the same fees. So it isn’t like it helped you compare the cost of a ticket.
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.
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.)
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 to believe this happens more frequently than not. For me, it is not worth the hassel.
Finally, SW is definitely not the automatic best fare airline it once was. Far from it. AND, as Cranky has pointed out lately, their no-fee baggage policy may soon be a thing of the past. Stay tuned….
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 time. I believe the article said if you check one bag, then WN has the lowest price 67% of the time. And if you check two bags, they are the best value 97% of the time. But I could be wrong about those actual percentages. Perhaps Mr. Cranky has the empirical data.
Arubman – You can read the full study here:
http://www.etopaz.com/uploads/PDF/2013%20Southwest%20Study.pdf
It is misleading to use the 23% (not sure if that’s accurate or not) and the 40% statistic. This didn’t look at the entire domestic market. It only looked at markets where Southwest flew.
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.
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 trust the most should, over time, rule the day. Time, and continued change, will tell.
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!
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.
Jetblue also does not charge for the first checked bag.