Even though he couldn’t use his airline ticket, Eric Smith refused to cancel his reservation on a United Airlines flight from Omaha to Baltimore.
The reason? Smith ran a few numbers, with frustrating results.
His return ticket cost $134, plus baggage fees. But United’s change fee, which is $200, would have zeroed out the value of his credit.
So he booked a one-way return flight on Southwest Airlines for $152 — about the same as his original flight, including baggage fees — and never looked back.
“Why should I spend any of my precious time on hold to cancel the ticket when I get absolutely nothing out of it?” he said. “To do the airline a favor? Do you think they would do me any favors?”
By almost all accounts, the numbers of passengers who walk away are rising, as airlines continue to raise the price of changing a nonrefundable airline ticket.
An Alaska Airlines representative acknowledged that the airline experiences deliberate no-shows on some flights, although she wouldn’t say how many. Yet its change fees are far more reasonable than those of other airlines. Alaska charges $75 for an online change and $125 if it’s done through a call center. But any changes made two months before a flight don’t incur any fees.
The task of ensuring that these strategic absences aren’t felt in the bottom line falls to airlines’ sophisticated revenue-management programs, which are designed to oversell a flight based on a calculation that a certain number of passengers won’t show up.
“On certain fares, and on certain routes, there will be a higher number of no-shows,” said Warren Lieberman, president of the technology consulting firm Veritec Solutions and one of the pioneers in the field of airline revenue management.
“If they’re selling tickets for $149, you can predict that more passengers will walk away from the fare, because the change fee is $200.”
But the programs handling airline seat inventory, which are called yield-management systems, already know that passengers like Attwood and Smith won’t make their flights.
In the airline industry, this kind of high-tech soothsaying is known as passenger choice modeling. It uses complex mathematical formulas to help airlines determine how many seats they can sell, and at what price. The modeling helps an airline make money.
And airlines are making lots of money from change fees. The domestic airlines collected more than $2.5 billion in ticket-change fees in 2012, according to the U.S. Department of Transportation, up from $2.4 billion a year before.
Airlines say the answer is to buy a fully refundable ticket, but those fares are typically priced for business travelers on an expense account and can be three to four times as expensive as a nonrefundable ticket.
Some airlines also offer a “flexible fare,” a special ticket that includes the benefit of waiving certain surcharges and would allow you to change your plans without having to pay a $200 fee.
It’s difficult to imagine change fees climbing any higher without the government stepping in and saying, “Enough.”
Christopher Elliott is the ombudsman for National Geographic Traveler magazine and the author of “Scammed.” Read more travel tips on his blog, www.elliott.org or email him at celliott@ngs.org.
© 2013 Christopher Elliott/ Tribune Media Services, Inc.
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