United Airlines bowing to customer demands?

Earlier this month we looked at the nation’s major airlines and their continued efforts to deny cash refunds for flights that were canceled due to the pandemic. Despite requirements that any airline accepting government assistance and bailouts do so as part of the agreement, many airlines continued to push vouchers (frequently with short expiration dates) instead of cash refunds unless the media pointed out what they were doing. At United Airlines, that policy hasn’t changed – at least not yet – but they are announcing one bit of relief for travelers which suggests that they’re at least paying attention to the angry demands of customers. They are doing away with flight change fees and they claim that this is a permanent policy, not just a temporary measure while their business is still slumping. (CNBC)

United Airlines on Sunday said that it will permanently scrap fees to change domestic flights, a big bet that more flexible policies will win over much-needed customers as the pain from the coronavirus pandemic’s impact on air travel continue to mount.

It’s a page from the playbook of rival Southwest Airlines, which doesn’t charge customers fees to change their flights.

“Following previous tough times, airlines made difficult decisions to survive, sometimes at the expense of customer service,” said United CEO Scott Kirby in a news release. “United Airlines won’t be following that same playbook as we come out of this crisis. Instead, we’re taking a completely different approach – and looking at new ways to serve our customers better.”

Previously, if you booked a flight and then decided to switch to a different one, United would charge you $200 for the privilege of doing so. They’re scrapping that fee entirely. Also, if you showed up at the airport and found there was an earlier flight available, you would have to pay $75 to change on the same day. That fee is also going away.

This is obviously good news for regular travelers, but we should also wonder what spurred this sudden surge of generosity. The first and easiest answer is that demand for air travel has shown almost no signs of recovery corresponding to many states slowly reopening for business. As of last month, the TSA was still reporting only 30% of the number of passenger screenings they performed during July of last year. In other words, the airline business is still only a shadow of what it traditionally has been, particularly during the normally busy, summer holiday season.

More importantly, we may finally be seeing a crack in the armor of the overall airline industry’s stranglehold on both personal and business travel. In the United States, it’s a completely “open secret” that the airlines operate as a shadow trust entity. They match each other’s fees, changes to seating design and accommodations to the point where it’s impossible to deny that they are coordinating their policies. They have long since divided up the nation between them with each airline operating their own primary “hub” cities to cut down on competition. Sadly, the government has never demonstrated the ability or interest to investigate such price-fixing schemes.

But all of that was done when flights for all major airlines were booked to the brim. There was plenty of cash to go around, so there was no need to bother trying to undercut the competition by offering better service or cheaper prices. In fact, as seats grew smaller and closer together, one could plausibly argue that they were all intentionally making air travel less comfortable in order to spur people to spend more for upgraded seating. And if travelers groused about it, so what? The airlines were the only game in town so they could get away with it.

But now, with the pandemic making both personal and business travel less appealing, there aren’t enough travelers to fill a sufficient number of flights each day to keep these businesses profitable. In response, it looks like United is taking a tentative step to offer better rates that might lure some passengers into their fold. Could more spacious seating and better amenities follow? And will the other airlines be forced to similarly improve service to keep up with United? We can only hope so. That’s how competitive business is supposed to operate in a capitalist society. If the pandemic produces no other beneficial result, perhaps it will bring actual competition back into the airline business.