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Why American Eliminated Change Fees

Madhu Unnikrishnan

September 11th, 2020

American Airlines’ decision to eliminate ticket-change fees for domestic and near-international flights was aimed to adapt to the changing demographics of its passengers. Although the airline announced its new policy the same week as United and Delta, Chief Customer Officer Alison Taylor said the move had been long in the planning.

“Both our demographics and why people travel are why we’re pivoting now,” Taylor said in an interview with Airline Weekly. “Our travelers now are quite a bit younger and are not experienced road warriors, so we wanted to react to that.”

As the pandemic has ground on in the U.S., American’s passengers have skewed younger. Before the pandemic, travelers under the age of 30 comprised 10% of American’s passengers. Now, they account for more than 30%, Taylor said. These passengers are primarily leisure travelers or can now work remotely and are opting to work from beach destinations in Florida, the Caribbean, and Hawaii, Taylor said.

These younger travelers are more likely to purchase basic economy fares than other leisure travelers, but change fees still apply to those fares. The elimination of change fees is an incentive to upsell basic economy passengers to higher fares.

In addition, business travel on American’s network is down 95% from last year, so the carrier is pivoting to focus on leisure destinations and travelers, Chief Revenue Officer Vasu Raja said at a conference this week. Even though most companies have grounded their employees, those people still are flying for leisure. They expect the same perks and convenience they had as business travelers on their leisure trips, which also informed American’s decision to eliminate change fees, Raja added.

Separately, unlike some of its competitors, American is not blocking middle seats. The carrier believes effective social distancing is not possible on an aircraft. Instead, American is working with scientists from Vanderbilt University on cleaning protocols and on a campaign to educate passengers on the steps the carrier is taking to make travel safe, Taylor said.

Madhu Unnikrishnan

September 11th, 2020

Photo credit:  American Airlines

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