When fees get out of hand


I read today that United Airlines is increasing its change fee to $150 per ticket. In other words, if you book a flight and need to change your plans later, they charge you $150 for the transaction. They also bill you the difference between the old fare and the new fare, which is standard procedure for every airline. But it’s the magnitude of the change fee that interests me, since it’s now large enough to buy an entire ticket on competing airlines.

In particular, I’ve purchased tickets on Southwest that cost less than $150 per round trip. This makes me wonder how such a large change fee might influence the behavior of people who normally fly United. Though I don’t pretend to understand the full dynamics of people’s travel decisions, it can’t be a good thing when the ancillary fees and penalties alone from one airline (United) are more than the entire cost of a ticket on another — especially if that second airline doesn’t levy any change fees at all (Southwest).

What’s the takeaway here? I think people are smart enough to notice that one company’s nickel-and-diming has gotten so severe that it overshadows the entire price their competitors charge for the same product. It’s like one store charging a restocking fee equal to 100% of what the product costs at another store down the street. Unless the other store also charges the same outrageous fee, you’d never shop at the first one. Before long, some portion of people are going to wise up and start buying from the vendors who don’t hit you with such enormous fees, and the market will reward those companies that keep fees at a reasonable level relative to the cost of the product.