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Delta eliminates international change fees, adds more flexibility to new tickets

Delta eliminates international change fees, adds more flexibility to new tickets

Old Dec 9, 2020, 9:47 am
  #1  
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Delta eliminates international change fees, adds more flexibility to new tickets

-Permanent elimination of change fees on international tickets.
-Change fee waiver extended through March 2021.

https://news.delta.com/control-your-...lexibility-new
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Last edited by DLASflyer; Dec 9, 2020 at 9:53 am
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Old Dec 9, 2020, 9:57 am
  #2  
 
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Originally Posted by DLASflyer
-Permanent elimination of change fees on international tickets.
-Change fee waiver extended through March 2021.

https://news.delta.com/control-your-...lexibility-new
Excellent and nice to see them following AAs move on this. I still don’t understand why they haven’t gotten rid of the SDS/SDC $75 fee for FO and below yet? Both AA and AS have dropped the fee and UA is adding free SDS Jan 1st. Obviously this doesn’t affect me if I travel solo as they waive the fee for me being a PM but it’s annoying when traveling with companions to have to pay the $75 fee, especially when all the other major carries have gotten rid of it in some form.
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Old Dec 9, 2020, 10:50 am
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I wouldn't be so quick to consider this an excellent change. It has its pros and cons. But let's not pretend that in the long run this isn't going to be used to harm frequent flyers/Medallions.

In the long run, it's pretty clear where this is all going. The Basic Economy devaluation of Medallion status is coming in with strong force. Main Cabin is essentially becoming the "new" refundable fare. I expect the price difference between Basic Economy and Main Cabin to continue to rise - including increased decoupling of inventory availability for Main Cabin versus Basic Economy (e.g. Main Cabin cannot book into V, X, or T - only Basic Economy can). If you want that $600 r/t fare to Europe booking into the V fare class, you'll have to book Basic Economy. If you want Main Cabin (and all the benefits: no change fees, upgrades to C+, GUC eligibility), you'll need to book into the U or L fare class at $1000 plus pay the standard "BE vs. Main Cabin fixed cost" upgrade cost of $200.

As long as the pandemic is going on, I don't think you'll see this (airlines want cash no matter what), but as soon as business resumes, expect this to be the new normal.
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Old Dec 9, 2020, 10:57 am
  #4  
 
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As someone without any status who has had many scenarios where he would have changeed his main cabin tickets if not for the change fee, I'm very happy for this change. That said, if this ends up happening...

Originally Posted by ethernal
[...]I expect the price difference between Basic Economy and Main Cabin to continue to rise - including increased decoupling of inventory availability for Main Cabin versus Basic Economy (e.g. Main Cabin cannot book into V, X, or T - only Basic Economy can). If you want that $600 r/t fare to Europe booking into the V fare class, you'll have to book Basic Economy. If you want Main Cabin (and all the benefits: no change fees, upgrades to C+, GUC eligibility), you'll need to book into the U or L fare class at $1000 plus pay the standard "BE vs. Main Cabin fixed cost" upgrade cost of $200.[...]
... then I'll riot.
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Old Dec 9, 2020, 11:07 am
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Originally Posted by eastindywalrus

... then I'll riot.
Plenty have said that during the past 100 "enhancements" over that past 10 years (including the creation of BE fares "only to compete against LCC's" on routes served by Spirit and Allegiant)...yet here we still are. I am certainly less loyal than I used to be to DL though...
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Old Dec 9, 2020, 11:28 am
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Originally Posted by eastindywalrus
As someone without any status who has had many scenarios where he would have changeed his main cabin tickets if not for the change fee, I'm very happy for this change. That said, if this ends up happening...



... then I'll riot.
I'd love to be wrong. But I just don't see it any other way. Basic Economy has always been about incremental revenue extraction from customers - Medallions and others - by better segmenting their customer base. Up until now, it ha been more limited because - at the end of the day - the cost to serve doesn't change much (most Medallion benefits incur little cost to Delta, other than some small catering costs). But elimination of change fees *does* incur costs to Delta. It will impact load factors because it impacts revenue management. There is a real bottom-line cost to this. End result? We have to expect pricing differentiation between Main Cabin and Basic Economy to increase. Furthermore, they will increase in specific ways: one is that they will want to reduce the number of speculative bookings. Speculative bookings are going to be driven by "wow, this is a great deal, maybe I'll take this trip." If you eliminate some of the great deals (or offer only non-changeable non-refundable fares for the great deals), that reduces speculative booking which reduces the real cost of load factor wasteage.

Domestic was.. more manageable. The domestic network is higher volume, higher frequency, more predictable, more close-in booking demand, and lower ticket costs (reducing speculative booking). International networks are lower volume, less frequency, less predictable, less close-in booking demand, and higher ticket costs (encouraging speculative booking). All of those attributes mean that the cost to eliminate change fees on international flights is higher than domestic flights. That cost is going to be incurred in some way - and that means higher main cabin ticket costs. It's just the reality of the market.
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Old Dec 9, 2020, 11:34 am
  #7  
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Originally Posted by ethernal
In the long run, it's pretty clear where this is all going. The Basic Economy devaluation of Medallion status is coming in with strong force. Main Cabin is essentially becoming the "new" refundable fare. I expect the price difference between Basic Economy and Main Cabin to continue to rise - including increased decoupling of inventory availability for Main Cabin versus Basic Economy (e.g. Main Cabin cannot book into V, X, or T - only Basic Economy can). If you want that $600 r/t fare to Europe booking into the V fare class, you'll have to book Basic Economy. If you want Main Cabin (and all the benefits: no change fees, upgrades to C+, GUC eligibility), you'll need to book into the U or L fare class at $1000 plus pay the standard "BE vs. Main Cabin fixed cost" upgrade cost of $200.
My expectation is that they will still use the same fare classes (e.g. you can book an E fare that relies on underlying V inventory or you can book a V fare) but the adder will increase. It's also possible that the adder is different for different fare classes: maybe V, X, T have a $300 adder and U, L have a $200 adder. It's also possible to file completely different fares.

I think the airlines will run into a loyalty problem pretty quickly, but when times were good Basic Economy was a good motivator to get elites to buy higher fares.
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Old Dec 9, 2020, 11:37 am
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Originally Posted by VFR
My expectation is that they will still use the same fare classes (e.g. you can book an E fare that relies on underlying V inventory or you can book a V fare) but the adder will increase. It's also possible that the adder is different for different fare classes: maybe V, X, T have a $300 adder and U, L have a $200 adder. It's also possible to file completely different fares.

I think the airlines will run into a loyalty problem pretty quickly, but when times were good Basic Economy was a good motivator to get elites to buy higher fares.
Fair enough - different ways to skin the cat and get the same outcome. The end result is the same: the era of being able to buy cheap fares early and get Medallion benefits is probably coming to a close.
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Old Dec 9, 2020, 12:51 pm
  #9  
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Can't really see DL making their main cabin fares un-competitive with their peers. As we see yet again here, they tend to follow each others programs and fares pretty closely.
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Old Dec 9, 2020, 1:09 pm
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Originally Posted by xliioper
Can't really see DL making their main cabin fares un-competitive with their peers. As we see yet again here, they tend to follow each others programs and fares pretty closely.
Their main cabin fares will be competitive with other airline's main cabin fares, and their basic economy fares will be competitive with competitors basic economy fares. Those two things will still be true, but says nothing about the increase in spread between main cabin and basic economy fares.

This is common sense. The flexibility and value of main cabin fares relative to basic economy tickets is going up. Airlines are still going to target for ~40% of non-business passengers to buy Basic Economy (no airline gives these exact numbers, but that's typically the estimate of the breakdown - although I'm sure during the pandemic it is much higher given ticket flexibility on all fares, especially on Delta with blocked middle seats). To keep that ratio, that means Main Cabin fares will go up because Main Cabin fares are now more valuable (due to increased flexibility). The value of the flexibility is higher the lower the ticket price is (it essentially allows you to hedge against future price increases, but depending on exactly how the change fee works, potentially allows you to realize future fare drops). So naturally the price differential will grow, especially for low-priced tickets.
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Old Dec 9, 2020, 1:21 pm
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Who knows what the future holds, but for now I'm happy that I can book super-cheap basic economy fares with free cancellation/free changes all the way upto my trips for Presidents Day weekend 2022. This would massively help in making multiple flexible plans for various holidays and weekends without worry for the next year.
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Old Dec 9, 2020, 2:01 pm
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I don't know where the future goes, but I applaud this change for the moment. Too many unknowns about what travel may look like in 2 years to decide if this is good, bad, or indifferent IMHO.
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Old Dec 9, 2020, 2:07 pm
  #13  
 
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Originally Posted by DLASflyer
-Permanent elimination of change fees on international tickets.
-Change fee waiver extended through March 2021.

https://news.delta.com/control-your-...lexibility-new
Specifically, permanent elimination of change fees for international travel originating from North America.
Probably covers the majority of their international tickets, but the change doesn't directly affect those of us living elsewhere.
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Old Dec 9, 2020, 2:20 pm
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Delta's basic economy is still better than the other airlines' comparable categories. It's less restrictive. I don't mind booking it for domestic.
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Old Dec 9, 2020, 4:16 pm
  #15  
 
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Originally Posted by ethernal
I'd love to be wrong. But I just don't see it any other way. Basic Economy has always been about incremental revenue extraction from customers - Medallions and others - by better segmenting their customer base. Up until now, it ha been more limited because - at the end of the day - the cost to serve doesn't change much (most Medallion benefits incur little cost to Delta, other than some small catering costs). But elimination of change fees *does* incur costs to Delta. It will impact load factors because it impacts revenue management. There is a real bottom-line cost to this. End result? We have to expect pricing differentiation between Main Cabin and Basic Economy to increase. Furthermore, they will increase in specific ways: one is that they will want to reduce the number of speculative bookings. Speculative bookings are going to be driven by "wow, this is a great deal, maybe I'll take this trip." If you eliminate some of the great deals (or offer only non-changeable non-refundable fares for the great deals), that reduces speculative booking which reduces the real cost of load factor wasteage.

Domestic was.. more manageable. The domestic network is higher volume, higher frequency, more predictable, more close-in booking demand, and lower ticket costs (reducing speculative booking). International networks are lower volume, less frequency, less predictable, less close-in booking demand, and higher ticket costs (encouraging speculative booking). All of those attributes mean that the cost to eliminate change fees on international flights is higher than domestic flights. That cost is going to be incurred in some way - and that means higher main cabin ticket costs. It's just the reality of the market.
In what way is that different from any other (for profit) business? What would you do differently, if you were sitting in the big chair and had a responsibility to your shareholders (and a performance bonus on the line)?
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