Airlines waive change fees in hopes of spurring reservations
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United Airlines announced it would no longer charge fees to ticket holders for canceling or changing most domestic flights, becoming the first U.S. carrier to do so. Shortly afterward, Delta and American said they would do the same thing. Airlines want folks to buy tickets in these uncertain times, but in waiving the fees, they’re also cutting a significant revenue stream.
U.S. airlines generated almost $3 billion in revenue from change and cancellation fees last year, according to the Transportation Department. Robert W. Mann is an airline industry analyst.
“It is historically a lot of revenue, but a lot of it is collecting that revenue from customers who are no longer around,” he said.
Like business customers who aren’t flying right now. He said the calculus for airlines here is all about generating demand.
“We can eliminate the uncertainty for customers who we really would like to book travel in advance,” Mann said. “And then we can also, you know, give ourselves another opportunity to upsell.”
Upsell because the change fees won’t be waived for basic economy tickets.
Zach Griff covers the airline industry for the travel website The Points Guy. He said what airlines need right now is working capital.
“Any money that the airline gets right now is money,” Griff said. “They’re burning cash, millions of dollars of cash each day, and they’re still working on trying to trim that back down to zero.”
So, he said, airlines need folks to make future investments in travel even if customers have to change or cancel a flight.
COVID-19 Economy FAQs
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Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.
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Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.
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Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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