The Highest Fees in the Airline Business
CHARLOTTE, N.C. ( TheStreet) -- Change fees are high for domestic flights and even higher for international flights, reaching $750 in some cases. But airlines argue that the fees are reasonable, and the U.S. Transportation Department, which has the right to regulate the international fees, has apparently accepted that premise.
In April, the major carriers raised the fee to change a nonrefundable domestic ticket to $200 from $150. At the same time, the fee to change international tickets generally went to $300 from $250, with some variation by airline. At the high end, on some discounted first class international tickets, American
International fees are higher not only because international fares tend to be higher but also because international flying involves different dynamics than domestic flying, including less demand, fewer flights and more difficult operating requirements, said Henry Harteveldt, analyst for travel consultant Hudson Crossing.
For example, "some countries limit the number of flights that can be operated on any route by airlines from each country," Harteveldt said. "Also, longer distance flying obviously requires aircraft that can fly longer distances; these planes tend to be larger and more expensive." Except for a few markets such as New York-London, service is typically limited to just one or two flights a day.
As a result, "there may a huge opportunity cost to an airline when a passenger who books a discount fare wants to change a reservation, especially if that change is made at the last minute," Harteveldt said.
Like many, attorney and Vilas, N.C. consumer advocate Don Pevsner considers the high change fees to be "outrageous." He contends they provide an indication that airline deregulation has failed. "The rampant overreaching of the Airline Deregulation Act of 1978 cries-out for prompt Congressional re-regulation of gouges like the current airline ticket change penalties," Pevsner wrote in an essay. But he conceded that is unlikely.
In a 2012 complaint to the U.S. Department of Transportation, Pevsner argued that the $250 international change fees in effect at the time were unreasonable and that the agency had the right to reduce them. He said that while the 1978 act "removed federal jurisdiction over domestic airline rates, fares and charges," federal law still requires domestic and foreign air carriers to offer "reasonable prices, classifications, rules and practices related to foreign air transportation."
The DOT dismissed the complaint. In the 34 years since Congress approved deregulation, it has "declined to use this authority to strike down fare rules in foreign air transportation," the agency said in its response. Furthermore, it said, Pevsner "has not offered any specific evidence that the international change fees are unreasonable or demonstrated why we should deviate from our long-standing policy."
From the airlines' point of view, change fees are appropriate because if a person purchases a seat, that deprives the airline of the opportunity to sell the seat to someone else. If the buyer later decides to return the seat, that's fine, but it does not restore the time that may be required to sell this perishable product.