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United Raises Most Change Fees by $50, Will Others Follow?

Darren Booth | CNBC

Changing your United Airlines flight just got a little more expensive for many fliers.

Last Thursday, United quietly increased the change fee on most non-refundable airfares by $50. For domestic itineraries, the fee jumped to $200 from $150. And for international flights, the fee is now $300, up from $250.

United's frequent fliers discovered the change last week. Members of the popular forum Flyertalk.com first posted their findings on Thursday. On Friday, United confirmed the increase. Tickets issued on or after April 18 carry the higher fee.

Less-restrictive coach fares with higher prices and refundable tickets typically don't carry a change fee, and remain unchanged.

"The new change fee rates are only applicable for tickets issued on or after April 18," said Aaron Goldberg, senior manager of customer experience planning for United, on Flyertalk.com after much backlash. "(There is) no impact to what you may have already had on the books."

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Before United chimed in on Friday (and still after), frequent fliers have been quick to comment.

"(United) has to keep doing innovating things to ensure it remains last in the customer service ratings," said one Flyertalk member. "Another great step forward in the race to the bottom."

Another flier was more upset at the immediacy and lack of transparency about the change.

"It is the lack of disclosure that is so upsetting," the flier said. "This management only knows how to do things the dishonest backhand way."

United Comments

So why did United increase the fee without notice?

"We carefully manage our seat inventory and incur costs when a traveler elects not to fly in a reserved seat," a United media relations representative said, confirming the change. "We adjusted this fee to better compensate us for those costs."

United did not comment specifically on why the change was not announced more publicly.

Fee Rationale?

One industry analyst said the increase might be warranted due to the percentage of seats being filled (also known as load factor) is at an all-time high, but that it isn't a customer friendly move.

"As load factors rise, the opportunity cost of allowing changes rises with it, so while there is a valid economic rationale, it still won't be popular, especially as it was essentially snuck in place," said Robert W. Mann, airline industry analyst for R.W. Mann and Company.

Another analyst isn't so sure about the financial hit airlines take due to empty seats and rising load factors.

"With 80 percent or more of most US airlines' seats filled, airlines are clearly selling almost every seat they have, so I'm not buying United's excuses that they're inconvenienced when people don't show up for a flight," said Henry Harteveldt, airline and travel industry analyst with Hudson Crossing.

"Airlines also routinely overbook flights, selling more reservations than there are seats on the plane, knowing some people won't show up," he said. "So the airlines have already taken business steps to protect their bottom line."

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Will Other Airlines Follow Suit?

Both industry analysts agree that other airlines might match United's higher fees.

"The economic rationale (of rising load factors) applies across the industry, so I would expect to see competitors match," Mann said.

And as most airlines tend to raise or lower airfares based on the action of competitors, change fees probably aren't much different.

"I won't be surprised if other airlines match United," Harteveldt said. "If they don't, United has two choices: callback the change fee to $150, or stand alone."

So will other major U.S. carriers increase their change fees?

"We cannot comment on competitor pricing matters nor would it be appropriate to speculate on future pricing," said Paul Skrbec, spokesman for Delta Air Lines. "Delta's change fees are not impacted."

American Airlines did not immediately respond to a similar request for comment.

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