On a similar note...
On a similar note...
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As the coronavirus leaves travelers wary of committing to flights, most airlines have done away with change fees — some temporarily and some permanently.
JetBlue Airways was early to initiate the trend, announcing in February 2020 that all flights booked during what was then a two-week window would not be subject to change or cancellation fees (of course, that window was extended long past two weeks). Other airlines followed with their own temporary cancellation and change fee waivers, which have since been extended ... and extended.
But doing away with change fees also means doing away with a fairly significant source of revenue. Perhaps unsurprisingly, the three largest U.S. airlines (Delta Air Lines, American Airlines and United Airlines, together often referred to as “the big three”) collected the most overall dollars in such fees: a combined $2.2 billion.
Yet as a percentage of total operating revenue, it’s not the big three that have the most to lose from waiving change fees. It’s JetBlue. A NerdWallet analysis of Bureau of Transportation Statistics data from 2017 through 2019 found that revenue from cancellation and change fees accounts for a larger chunk of JetBlue’s total operating revenue than any other major airline. (Details of the methodology can be found at the end of this article.)
Most recently in 2019, JetBlue collected nearly $200 million in change and cancellation fees, comprising just over 2.4% of its total operating revenue that year.
What is JetBlue’s change fee policy?
While JetBlue was a leader in temporarily eliminating change fees, it’s one of the few major airlines that has not committed to getting rid of them for good as American, Alaska, Delta and United did. JetBlue will waive change or cancellation fees for customers with existing bookings made through Feb. 28, 2021, though.
As of now, for trips beginning in March 2021 that need to be changed or canceled, expect to pay up to $200 in fees depending on the ticket you booked. Fares booked in Blue Extra class can be changed or canceled for no fee; you’ll just have to pay the fare difference.
Learn more about all of JetBlue’s change and cancellation fees here.
Alaska stands to lose the most money relative to its size
Of all the airlines that have announced permanent change fee policies, it’s Alaska that stands to lose the most. Alaska came in not far behind JetBlue, with change and cancellation fees comprising 2.14% of its overall operating revenue between 2017 and 2019. Alaska announced in September that it would permanently drop change fees on all tickets except for those booked with Alaska’s version of basic economy, known as Saver fares.
American, which also committed to eliminating change fees on most tickets for domestic and short-haul international flying (excluding basic economy fares), took in the third-most revenue as a percentage of overall operating revenue, at 1.94%.
Southwest Airlines is notably absent from the list because it does not charge change fees and never has.
How much money do airlines make from change and cancellation fees?
While JetBlue collects a good chunk of revenue in change and cancellation fees relative to its total operating revenue, it still collects a fairly small amount relative to other airlines. American took in the third-most money via change or cancellation fees as a percent of its overall operating revenue between 2017 and 2019, but it took in the most money overall.
Here’s how much total money the major airlines collected overall in change or cancellation fees in each of the past three years:
In 2019 alone, the 10 largest U.S. airlines collected a combined $2.8 billion via change and cancellation fees.
Why are airlines getting rid of change fees?
While JetBlue’s pause on change fees is temporary, the pressure is on across all airlines to make it permanent. The travel industry can largely thank United for that, after it announced in August that its temporary change fee policies would become permanent. The other two of the big three, American and Delta, quickly followed up with news that they too would be ending change fees. Other major airlines, including Alaska and Hawaiian Airlines, have also permanently ended change fees for most flights.
The death of change fees is largely seen as a win for passengers who might otherwise fear the possibility of forking over hundreds of dollars should they need to reschedule their flight. These new policies might also benefit airlines that are otherwise desperate for revenue to sell tickets, as hesitant travelers might be encouraged to click "buy" on a ticket they might not otherwise be willing to commit to.
While passenger air travel is slowly creeping back up since the start of the pandemic, as evidenced by Transportation Security Administration data on checkpoint travel numbers, it’s impossible to say whether waived change fees have made passengers more inclined to travel by plane. There are tons of factors at play, whether it’s new airline health policies leaving passengers more comfortable with flying, deep discounts on airfare and hotel rooms compelling travelers to take advantage of deals, or cabin fever taking over as people tire of staying at home.
But a lack of change fees certainly makes it easier to book flights far into the future, given the peace of mind that you can get your money back if stricter lockdown measures return or infection rates rise.
The bottom line
While American Airlines collected the most money of all the major U.S. airlines in cancellation and change fees between 2017 and 2019, JetBlue stands to lose the most money as a percent of its overall operating revenue if it ultimately follows in the footsteps of the big three and bids adieu to change fees. Right now, though, JetBlue’s no-change-fee policy is only temporary; the airline is set to bring back change fees on flights beginning in March 2021, at least for now.
We looked at the 10 U.S. airlines that collected the most revenue in change or cancellation fees in 2019, based on publicly available data from the Bureau of Transportation Statistics. We then assessed the average change/cancellation fee revenue collected per quarter between 2017 and 2019 for each airline. With those numbers, we calculated the percentage of the airline’s overall operating revenue those fees accounted for, also based on publicly available data from the Bureau of Transportation Statistics.
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