<B>CO, AA Raise Change Fees</B>
By David Jonas
Continental Airlines earlier this month quietly raised from $75 to $100 the fee charged for voluntary changes to nonrefundable tickets. It is the second time in just over three years that the carrier independently modified the change policy, which will add to travel management costs. In late 1997, Continental's fee increased to $75, from $50, and was matched quickly by most competitors (BTN, Nov. 10, 1997).
The policy shift also reverses Continental's earlier move to increase to $25 commissions paid to travel agents for processing such changes, returning payments to the previous $15 level. Continental said the rationale "was to make the fee more commensurate with the service provided and to cover revenue loss associated with unused inventory."
Thus far, Continental's move was followed only by American Airlines, which last week upped its change fee to $90 but maintained travel agency commissions at $25.
Change fees have become more relevant to corporations over the past few years as many travel managers have pushed for expanded usage of cheaper, nonrefundable fares.
According to Topaz International, a Portland, Ore.-based airfare auditing company, 16.1 percent of fares used by business travelers in 4Q00 were nonrefundables, with another 42.6 percent of all negotiated fares falling into the nonrefundable category. Those numbers compare with 13.6 percent and 37.7, respectively, in 4Q99 and 7.4 percent and 30.8 percent, respectively, in 4Q98.
"Nonrefundables represent a big chunk of what business travelers are using and the higher change fees clearly will have a big impact on corporations," said Topaz president Valerie Estep.
Runzheimer senior consultant Rolfe Shellenberger said Continental has been a leader in change fee increases because its network, including business-oriented hubs in Houston and Newark, is more vulnerable to possible business travel traffic erosion. "But last-minute changes and cancellations are significant economic liabilities for the airlines," he said. "It isn't a matter of nickel and diming, but of taking a cost center and turning it into a profit center within the airline."
Because of inherently lower prices, low-fare carriers generally have lower change fees. AirTran Airways, for example, has been charging $50--agents earn 10 percent--and has no plans to make modifications.