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Trying to drive business fliers to purchase costly, refundable tickets, the carrier changes its rules on nonrefundable fares.
By STEVE HUETTEL, Times Staff Writer
© St. Petersburg Times, published August 28, 2002
Travelers flying on inexpensive, nonrefundable US Airways tickets had better not change their plans at the last minute.
Stuck in traffic and miss your flight? Your ticket will be worthless. Ditto if Junior catches the flu or that business meeting is canceled and you don't rebook before your plane leaves the gate.
Traditionally, airlines have allowed passengers to apply the value of nonrefundable tickets -- minus a $100 change fee -- to future travel if they don't make their flights.
But on Tuesday, US Airways made sweeping changes to the rules on nonrefundable tickets in an effort to prod more business travelers into paying expensive refundable fares, usually purchased shortly before their trips.
"We want to make it clear you get what you pay for," said Stephen Usery, the airline's vice president for marketing and revenue management. "It's an economic decision. I'd love to drive a Jaguar and pay the same price I did for my Toyota Corolla. But life doesn't work that way."
Travel agents and corporate travel managers predicted the change would chase off many of the airline's best customers even as US Airways is struggling to regain its financial footing in federal bankruptcy court.
"It's unbelievable," said Debbie Elgin, owner of Bay Pines Travel in St. Petersburg. "Why wouldn't they take care of their customers? Things happen in people's lives. This could cost people hundreds of dollars if their plans change."
Whether the policy sticks depends on how other airlines react, said travel professionals. No other U.S. carriers adopted the new rules Tuesday. Like US Airways, they would have to tip their hand through a formal filing with the Department of Transportation.
The new policy took effect for tickets purchased starting Tuesday for US Airways' domestic and international routes.
There's more. Passengers with nonrefundable tickets will not be allowed to fly stand-by for alternative flights. Although they will continue to receive frequent flier miles toward travel awards, beginning in January the miles from nonrefundable tickets can no longer be applied for elite-level status that qualifies members for upgrades and other perks. Those levels require members to fly a minimum number of miles annually.
In addition, US Airways will charge customers $25 for a paper ticket when an e-ticket is available and will stop serving free alcoholic drinks to economy passengers on flights across the Atlantic.
Except for a handful of low-fare carriers, airlines have bled red ink as the number of passengers and the fares they paid dropped sharply over the last year.
Airlines traditionally relied on business travelers paying high refundable fares to make profits. But as the economy soured starting in spring 2001, many companies began requiring travelers to use cheaper nonrefundable tickets.
In response, airlines have imposed extra fees for travelers flying on cheap tickets. Some began charging $80 for checking a third bag. Continental Airlines stopped giving passengers full cans of soda or plastic knives with breakfast unless they asked for them.
Delta Air Lines recently told Raymond James & Associates in St. Petersburg that it was eliminating "waivers and favors" -- special perks for big corporate customers, such as ignoring ticket change fees and opening first-class seats for executives who didn't otherwise qualify for the privilege.
The brokerage firm's policy requires that travelers choose the cheapest fare that meets their schedule, and more than half fly on nonrefundable tickets, said Sheila Kittle, vice president of corporate travel at Raymond James. If other traditional carriers follow the lead of US Airways "it will force corporations like ours to look more at (low-fare carriers) JetBlue and Southwest," she said.
A survey of 184 companies in the Fortune 500 showed 57 percent of their travel was on nonrefundable tickets, said Kevin Mitchell, executive director of the Business Travel Coalition, which represents large corporations on travel issues.
Under the new policy, he said, a traveler from Philadelphia who misses the return flight from Detroit on US Airways would have to pay a one-way, walk-up fare of $546 in addition to the $556 for the nonrefundable ticket, he said.
"This policy change is designed to produce a chilling effect on business travel . . . to drive business travelers back to refundable tickets," Mitchell said.
On average, not quite 10 percent of passengers fail to show up for their ticketed flights on US Airways, Usery said. But only a small fraction are travelers on nonrefundable tickets, he said.
Across the Atlantic, British Airways began selling nonrefundable "use it or lose it" tickets to compete against low-fare competitors on short European routes. Is the airline planning to bring the fares to the states?
"At this point, no," said British Airways spokesman John Lampl.
-- Times researcher John Martin contributed to this report. Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.