United Airlines CEO Says He’s Wanted To Eliminate Change Fees Since 1998

United Airlines CEO Scott Kirby shared that in 1998 he was a Vice President at America West and a single conversation changed his view about change fees, and he’s wanted to eliminate them ever since. It took until August 2020 to do it and then American, Delta, Alaska and JetBlue all followed. His comments came recently at the J.P. Morgan Industrials Conference.

The interesting part of the story isn’t the golf game that game him the epiphany, it’s why it took 22 years for this change to happen.

Kirby told his story at the J.P. Morgan Industrials Conference about playing golf with a friend in Phoenix, and that friend flew Southwest. Kirby pressed him on why he’d eschew America West ‘with the better frequent flyer program’ and other benefits, and the friend said it was Southwest’s flexibility.

The man was a car dealer. He’d fly out to auctions every week. He might buy 6 or 10 cars, or no cars. If he made several purchases the paperwork took hours, if he didn’t buy any cars he’d be done and want to go home. And paying change fees to change his plans 52 weeks a year sent his weekly business to Southwest.

Of course what’s at issue in the story is same day changes. When Kirby was President of American Airlines in 2015, American imposed stricter rules on same day changes, requiring passengers to keep the same routing – eliminating the merger benefit to customers of increased number of hubs.

Kirby described getting rid of change fees (on non-basic economy tickets) as “a billion dollar decision” so “you almost have to become CEO” to make it. Change fees didn’t just collect a lot of money, it was money exempt from the 7.5% excise tax on domestic airline tickets, so unbundling changes from the ticket price was also tax arbitrage.

I predicted in 2018 that Kirby would become CEO in 2020. Months after he did, United announced this change.

Why now, though, aside from becoming CEO? Surely he could have convinced Oscar Munoz or Doug Parker to eliminate change fees if he could show doing so would earn business to more than offset any losses?

Airlines weren’t going to collect change fees for some time anyway. They had outlived their usefulness segregating customers. And eliminating change fees for fares other than basic economy served to create greater differentiation between business (standard economy) and leisure (basic economy) fares. In other words, it was the lowest-cost time to make a change that would serve the car dealer without giving anything to the leisure passenger, since post-pandemic waivers lowest fare itineraries aren’t changeable at all for any fee.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I’ll do him one better. I’ve wanted to eliminate change fees since 1969.

  2. “I hated being able to charge $2586 for a round trip coach ticket in the late 1990s. If only I could’ve allowed people to be able to flex their tickets!”

  3. People knock on SW but you cannot beat the 2 free bags and no change or cancelation fees. So nice to be able to change tickets if your plans change.

  4. @Raj,
    suppose part of WN’s motivation to add ORD, IAH and grow rapidly in DEN was to eliminate the loss of benefit that UA would gain because of UA’s lead in eliminating change fees?

  5. @Mark – Well said.

    Kirby doing this virtue signaling is like a buzzard protesting against eating meat: it’s unnatural.

  6. United used to allow same-day changes to an earlier flight at no charge. In fact, one day in 2009 I got to Orlando Airport hours before my flight to Washington Dulles was due to leave at 4:00 pm. The KIOSK told me that there was a 2:00 pm flight and would I like to change to it, since I was already at the airport? Push “YES” if you want to change. I did, and it issued a boarding pass for the 4:00 flight and a standby ticket for the 2:00 flight – and instructions to be at the gate by 1:30 pm. I did that, and was given a boarding pass for the 2:00 flight.

    The year before I was at Chicago O’Hare for a 9:00 pm flight to Baltimore. I had flown from and to Baltimore to get Southwest fares without having to fly on Southwest. But that flight would get me in at about 11:30 pm Eastern time and it would have been tricky getting home. So I went to the gate for a 7:05 pm flight to Washington National Airport and asked if I could standby for it. The agent said to come back at 6:55 pm. I did, and he gave me a boarding pass for that flight. No charge here, either.

    In both cases, it was to leave EARLY. Changing me meant one fewer seat went to waste on the earlier flight, and, more importantly, opened up a seat on the later flight, one United might leave, especially the Baltimore flight which was the last flight of the day. I don’t know if this would have worked if I had wanted to leave later.

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