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August 05, 2021

Airlines make $2 billion a year off cancellation fees: report

By Jason Buckland, Sympatico / MSN Finance

It’s pretty easy to pick on airlines these days. It really is.

Everyone generally hates them, and we’ve all got a story about how their staff was rude or they’d lost our luggage or they sat us next to Mo’Nique on a trip with no in-flight meal.

But goodness, how can an industry so generally despised by its consumers stay afloat, let alone post the kind of mad-cash-cow numbers airlines do?

Well, here’s a start.

We all knew airlines ripped us off with fees and charges, sure, yet new data from the U.S. Department of Transportation shows just how ridiculous the big picture is.

According to the Wall Street Journal, airlines make a “whopping” $2 billion on change and cancellation penalties each year alone from passengers adjusting or modifying their travel itineraries.
That the fees for changes or cancellations are big business is no surprise, but given that it’s usually jacked-up baggage fees that draw our ire, it’s certainly notable.

The airlines will tell you the change and cancellation penalties are to give travelers incentives to purchase full-fare, unrestricted tickets and to limit no-shows, though they likely won’t tell you that – despite the PR spin – the fees are still going up.

The WSJ reports “several” airlines have raised the change fee on domestic tickets up to $150 from $100 this year, and JetBlue just “imposed a $100 change fee, up from $40, for reservations made online.”

What really stinks about the change and cancellation fees, too, is how uniquely unfair they are to airlines.

Theatre and sports tickets are non-refundable, yeah, but unlike with airlines, they can be transferred to friends or family. And even with hotels and restaurants – who can sometimes charge you a fee for cancelling a reservation – you can typically call it off up until 24 hours before the date.

Anyhow, just thought this was all food for thought. We need to plan better, I guess, but – when a meeting changes or we get sick or have a family emergency -- it’s interesting to finally quantify how much airlines do make off us when we’re most vulnerable.  



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...