QF Flight Change fee: does that reflect real costs ?

[AnonymousCoward]

Reduce their change fees just like the credit card providers did recently with overlimit/missed payment fees.

Businesses look at the "bottom line" aka profit. If change fees were reduced, with the resulting loss of bookings in more flexible classes + change fees themselves, then how would an airline react to maintain the "bottom line" - less "red e-deal" seats, or up the price of such fares, or tighten the conditions for booking fares in the first place.

There is no "free lunch" in a competitive market place.

 

[offshore171]

But the change fee, which is essentially an admin fee borne within Australia.

This is the same misconception as the OP. It's not an "admin" fee to cover the IT cost of the change.

It is an upgrade to your fare class. You are purchasing an additional entitlement (i.e. flexibility) that is not a standard part of the base fare class.

 

[MEL_Traveller]

I suspect the hefty change fees are part of a broader issue. They are high enough to discourage changes, but if you really want to change, it leaves the option open.

Why part of a broader issue? Because if the fares were truly non-refundable and non-changeable, I suspect it might present some problems for airlines and their overbooking policies. It would be somewhat harder to argue that they can overbook if no one can change their ticket (ie the seat is not theirs to sell anymore).

By retaining the ability to change, it introduces potential uncertainty, which then opens up the 'oh, we need to overbook' argument.

EU regs have dealt with this through hefty overbooking penalties.

 

[serfty]

You call that a change fee?

This is a change fee: "CHANGES CHARGE USD 200.00 FOR REISSUE." - on an AA USD49 LAX-DEN fare.

 

[ComeFlyWithMe]

If you don't like the conditions, don't buy the fare. All airlines have large penalties on cheap fares, it's how the industry works.
If you abolish change fees, the airline will need to recover the full revenue cost of that seat, which may be twice what you paid, therefore they would just double the fare.
I can't imagine making the above changes is actually good for anyone, and I think this is a classic case of consumer overreach.

 

[Pleb Status]

Why part of a broader issue? Because if the fares were truly non-refundable and non-changeable, I suspect it might present some problems for airlines and their overbooking policies. It would be somewhat harder to argue that they can overbook if no one can change their ticket (ie the seat is not theirs to sell anymore).

In reality, making all cheap tickets non changeable would actually increase the amount of overbooking by an airline.

Even with reasonably high change fees, most tickets will have at least some residual value so there is an incentive for most passengers to change their flight before departure. Therefore, an airline should have a very good idea of the load expected at the time of departure as those who deliberately cannot fly will advise beforehand by changing their flight.

If all cheap tickets are non changeable, the number of no shows on a flight would significantly increase as no one would tell the airline that they were not going to fly (I have let some effectively non changeable American and European flights go even though I knew weeks before I could not fly).

Rightly or wrongly, the increased no show percentage would give airlines the confidence to overbook/overbook further as the chances of getting everyone on the flight will be better.

 

[MEL_Traveller]

In reality, making all cheap tickets non changeable would actually increase the amount of overbooking by an airline.

Even with reasonably high change fees, most tickets will have at least some residual value so there is an incentive for most passengers to change their flight before departure. Therefore, an airline should have a very good idea of the load expected at the time of departure as those who deliberately cannot fly will advise beforehand by changing their flight.

If all cheap tickets are non changeable, the number of no shows on a flight would significantly increase as no one would tell the airline that they were not going to fly (I have let some effectively non changeable American and European flights go even though I knew weeks before I could not fly).

Rightly or wrongly, the increased no show percentage would give airlines the confidence to overbook/overbook further as the chances of getting everyone on the flight will be better.

That could be one outcome - but the contractual principle would possibly be different. If you presented yourself at the airport with an inflexible ticket, hard for them to argue that they didn't think you were going to show up. It might lead to an increase in fares, but EU experience has shown otherwise.

I don't think airlines would be too keen on having these issues closely examined. I suspect much of their argument (for overbooking) is now outdated. Long gone are the days where fares were high and mostly flexible without penalty.

 

[moa999]

Its also worth considering that Qantas's actual profit (averaged out through the year) is literally a few dollars a flight.

All these additional fees, ticket levels etc, are a balancing act to get yield as high as possible without impacting demand.
You can't reduce one fee in isolation, without the airlines trying to get it back somewhere else.

 

[legroom]

The change fee is not just an administration fee. It is also a cost penalty that helps keep the plane full (and profitable) when it departs and therefore keeps the overall level of airfares down. It is arguable if $88 is not gouging however.

What may be a more equitable system is to vary the fee with respect to the date of departure. Changes more than say three months from departure should be far cheaper (say $15) as this gives the airline plenty of time to fill the seat. Changes between say one to three months from departure should be higher (say $30) as it will be more difficult to fill the seat, particularly during quiet times of the year. Changes less than one month from departure would be the most expensive (say $45).

Do not want to pay a fee, book a flexi fare and change for free.

What needs to be looked at is the 'telephone service fee' and other 'service' fees. Either the QF staff cost about $200-300/hr to employ or someone if making serious money from those fees.

Airlines are always keen to charge / keep any fee they could lay their hands on.

Consumers are also entitled to question those fees.

Without raising a question, things would remain as they have been: boys sweeping chimneys, lower wages for women, $30 CC surcharge etc .....

The discounted nature of Red-e-Deals is obvious to Blind Freddy.

What I'm looking at is we should look at them as an 'early birds' argument.

Once returned to the airlines, they would be in a position to on sell them for higher prices for 'later birds' as the 'early bird' window has now closed.

By charging a disproportionate change fee PLUS the ability to resell those tickets immediately at a higher price, consumers will be the loser.

This is not dissimilar to hotel bookings: early-bird rate - once gone - are not going to be reintroduced upon your cancellation and there is no penalty for cancellation (in cancellable cases).

Naturally, if you commit to a non-cancellable rate, you're .... committed.

The argument for date-related penalty is fair enough.

 

[incumbent]

US airlines make something like USD3 billion a year in revenue from change fees... I guess they'd just donate that to consumers if they were forced to get rid of change fees?

As consumer crusades go, this one is particularly misguided.

 

[legroom]

The Murray Financial Enquiry - supported by the PM - had already looked at & made an adverse recommendation against the CC surcharges by the airlines.

That was inspite of the fact that everyone knows there is a fee-free [BPay] option for the passengers.

The loss-of-income argument there is applicable here as well.

*******

My argument is that by cancelling a Red-e-Deal fare, carriers in fact already gain an advantage - they get back a seat which they can onsell at a higher price as the discount window has - most likely - closed.

Our access to this pool of cheap Red-e-Deals etc... is entirely dependent on the "early bird" access window. The argument about "loading" is difficult to understand as once returned, it is highly doubtful if that seat will open up another Red-e-Deal for that flight.

By changing (i.e. returning that seat back to inventory), we are simply returning the early-bird discount courtesy of our forward planning.

Why would that be penalised with a change fee ?

Granted, when you move to another flight, you'd have to cop the (usually higher) prices applicable at the time of switch - no argument there as the early-bird window may have gone.

US airlines make something like USD3 billion a year in revenue from change fees... I guess they'd just donate that to consumers if they were forced to get rid of change fees?

As consumer crusades go, this one is particularly misguided.

 

[JohnK]

Irrelevant comparison. Revenue for a seat on a plane is either there, or the seat is gone forever (barring the invention of time travel). Missing a payment for a CC incurs ongoing financing costs for a credit provider, but there's nothing that's 'gone forever'

Comparison is relevant.

If I book a flight for $89 to travel 16 July 2016 and in January want to change that to 23 July 2016 and cheap fares are still available then an $88 change fee is exhorbitant. The airline could still sell that seat easily.

A change fee of something like $35 which it was a few years ago is more than adequate.

Same with name changes especially when it's a spelling mistake.

You don't have to agree with my analogy or my opinion. The change fee is exhorbitant and no different to fuel surcharges on 'free' award flights that someone has earned by flying.

 

[incumbent]

If I book a flight for $89 to travel 16 July 2016 and in January want to change that to 23 July 2016 and cheap fares are still available then an $88 change fee is exhorbitant.

So book a fully refundable fare first and then cancel and lock in the "still available" cheap fare when you're sure.

Unless you're not willing to risk those cheap fares not being available, in which case...

 

[incumbent]

Our access to this pool of cheap Red-e-Deals etc... is entirely dependent on the "early bird" access window.

As you can see from a look at VA's weekly Happy Hour fares, there's a lot more to pricing and yield management than just that.

Your argument really just boils down to "This is how *I* think airlines should set their prices."

 

[legroom]

As you can see from a look at VA's weekly Happy Hour fares, there's a lot more to pricing and yield management than just that.

Your argument really just boils down to "This is how *I* think airlines should set their prices."

Is there something inherently evil with having an opinion ?

Were the I-know-best attitude to prevail, the CC surcharge (gouging) would be likely to remain for years.

I have yet to see your 'argument' for the CC surcharge loss to the airlines (which would be moot as the government will legislate against that soon).

 

[incumbent]

Is there something inherently evil with having an opinion ?

Were the I-know-best attitude to prevail, the CC surcharge (gouging) would be likely to remain for years.

I have yet to see your 'argument' for the CC surcharge loss to the airlines (which would be moot as the government will legislate against that soon).

Nothing inherently evil with the many dissenting voices to your opinion, either.

You have yet to see my argument vis-a-vis the CC surcharge because it's a completely and utterly different issue to that raised in this thread.

The "real costs" language really adds nothing of substance here. The vast majority of businesses are not bound by that sort of thing. What is the "real cost" of providing IT consulting services?

Let me know if you do attempt a substantive claim somewhere down the line so I can oppose it. But the RBA? I really don't think so.

 

[legroom]

Nothing inherently evil with the many dissenting voices to your opinion, either.

You have yet to see my argument vis-a-vis the CC surcharge because it's a completely and utterly different issue to that raised in this thread.

The "real costs" language really adds nothing of substance here. The vast majority of businesses are not bound by that sort of thing. What is the "real cost" of providing IT consulting services?

Let me know if you do attempt a substantive claim somewhere down the line so I can oppose it. But the RBA? I really don't think so.

Strange !

QF and VA both raised 'real costs' in their defence against the CC surcharge but against the exorbitant 'change' fee which brings back a seat which they will sell for a higher price suddenly it becomes 'nothing of substance' ?

 

[incumbent]

Your initial claim appeared to be about the ratio of the change fee to a cheap fare. Pretty sure any attempt at regulation (which won't happen for reasons obvious to most) will affect the denominator as well as the numerator.

I agree with the opposition to the CC surcharge. Not that that is in any way relevant to pricing of flexible fares. Airlines already sell the product you want, it's just not priced at the level you think it should be.