Airline Cancellation Fees Are a $2 Billion Industry

(Via WSJ):  According to Department of Transportation filings, US airlines earned $2 billion from change fees last year.  American Airlines reportedly earned more from change fees last quarter ($116 million) than from much-whined-about baggage fees ($108 million).  (The linked article has a nice rundown of what each airline received).

This is interesting to me not only because the numbers are sky high, but also because it illustrates an interesting fact about fees:  once they’ve been in place for a while, you come to accept them.  Change fees, which are now generally (though not always) about $150 on domestic tickets, seem to have become an acceptable part of doing business with airlines.  That’s because, at least in large part, we’ve had these fees for a while.  Baggage fees are new, and people complain about them constantly, despite that you can avoid them by not packing so much crap or having status.

The reality is this:  Travelers don’t way to pay much to fly.  That’s fine, but that comes at a cost, and the cost is $2 billion a year in fees.  Ask anyone who has flown Allegiant or Spirit, where the fees are absolutely brutal:  You’re incredibly happy when you’ve paid next-to-nothing for the ticket.  You don’t really even think about the $20 pick-your-seat fee (or at least you don’t think of it as part of the airfare — it’s in some other spending compartment.)  I wouldn’t be shocked to see even more movement in that direction (US Airways?), where fares stay at the lower end, and even more fees are tacked on.  This movement has been afoot for a year or so, and, as Ryanair has suggested, its logical conclusion is $0 fares with a ton of fees tacked on.  You’ll hate it at first, but you’ll love it later.


  1. Whoa, what’s with that humongous deals of the day ad?!

    Anyway, you can easily avoid change fees. Just buy an unrestricted fare. What? That’s expensive? Well, yes, but why shouldn’t it, given that it offers additional features? If airlines were to eliminate change fees, what would be the incentive for anyone to buy less restrictive fares?

    Personally, I have very rarely had the need to change a ticket. Maybe I am lucky or unusual. But given the financial situation the industry is in, if they were to eliminate this fee, they’d have to make up for the shortfall elsewhere. And then I might have to pay for it while now I am not affected by this fee.