Word came out last week that United had finally backtracked off its plan to force travelers to forfeit residual value when changing a ticket to a cheaper fare. On the surface, this looks like United was simply lining up with American and Delta, but instead, United has quietly chosen to use this as a weapon. People who book direct will do well, those who book through regular travel agents will also benefit in a different way. But those who book through online travel agents? It’s not going to be good news at all. This is somewhat confusing, but I think I can understand how the airline arrived at this plan.
This whole conundrum showed its face when United became the first airline to eliminate change fees on domestic tickets. At the time, United told people that change fees were gone, but if travelers changed to an itinerary with a lower fare, well, then they’d forfeit the difference. That could be a hefty tax, but it was a fence put in place to prevent people from booking a ticket and then monitoring for fares to drop later. Unfortunately for United — and fortunately for consumers — American and Delta did not follow. If you want to change to a lower fare on those two, go right ahead. You’re able to keep the difference as a travel credit for the future.
United tried to hold out, but it has now made the decision to reverse course. Now, anyone who exchanges a ticket booked directly with United for a new itinerary with a lower fare will get an electronic travel certificate for the difference that can be used with United for future travel. But this is where the airline decided to get cute. For some unknown reason, I delved deep into the world of Powerpoint Smart Art and crafted this explanation of what is really happening here.
So, yes, United is allowing someone who books to switch to a lower-priced itinerary and keep the residual value for future travel. But that is only allowed if you book directly with the airline. What if you book through a third party?
When someone books through a travel agent, the agency can’t issue an electronic travel certificate like United, but it can technically issue a Miscellaneous Charge Order (MCO) which acts in the same way. MCOs are archaic, non-electronic documents that aren’t as easily trackable as they should be, and in most of the world they are being replaced with Electronic Miscellaneous Documents (EMDs). The US is far behind in this plan, but MCOs still work for now. They’re just cumbersome.
I had assumed that United would handle this just like American and Delta and allow MCOs to be used by agents but no, it won’t. Instead, the airline has come up with a complicated plan that will work differently depending on the type of travel agent travelers use.
United has made all tickets issued through travel agents refundable minus a fee, except for basic economy, of course. Domestic tickets carry a $100 fee. International coach tickets are at $200, international premium economy tickets are at $300, and international business class tickets are at $400. In a way, this is really allowing travelers to make a decision on refundability after purchase instead of before. Right now, these penalties are nearly equal to the amount someone could pay above the lowest fare to get a refundable one. (That United pricing scheme is in place through the summer.)
What this means is that travel agents now have an advantage over booking United directly, and that seems weird. You’d think United would want to encourage people to book direct — and it does that in the narrow case where someone wants to exchange for a lower fare and can do that without paying a penalty if they book direct — but there is some method to this madness, I think. Then again, it could be dumb luck. As someone said to me… “you’re giving them too much credit.”
United isn’t making the refund an automated process. In fact, the filed tariff says it this way:
Translation: If you have a wholly-unused ticket that originates in the US and is booked through a travel agent, it’s refundable minus $100. But to do that, you have to use a waiver code and it is a manual process. Why make it so difficult?
Remember, there are traditional travel agents and there are online travel agents. Traditional travel agents may specialize in leisure or they may be travel management companies (TMCs) that focus on managing business travel. Either way, these agencies are more focused on customer service and adding value.
For the business-focused agencies, the refundability is going to be more attractive than the ability to exchange a ticket for a lower fare. They just like the flexibility, so this will likely be looked upon favorably. And for the leisure agency, this will be a really nice piece of added flexibility that can be offered to clients. We expect our Cranky Concierge clients to enjoy having this refundability, especially this year when travel plans are so up in the air due to COVID.
Then there are the online travel agents like Expedia, Priceline, etc. They are important in that they provide a whole lot of tickets at lower fares to help fill up United’s airplanes. But it’s safe to say that United — and all airlines — tolerate those companies. They don’t love them, but they need them to fill seats.
If you’ve ever booked through an online travel agent, you know that customer service is a foreign concept at these companies. These places focus on pushing through volume, and if you need to actually talk to someone… good luck to you. If you book one of these refundable fares through an online travel agent, the automated rules will show it as being non-refundable, like this option on Expedia:
The refundability lies in the manual text, and that means that these fares will look non-refundable as they would be on the United site. The only way anyone would know they’d be refundable is if you click and read the fare rules on the payment page. And for the record, Expedia has made that nearly impossible. Here’s how a domestic ticket fare rule looks for the penalty category.
There were another 10 lines to that rule, by the way, but I’d need to scroll to screenshot, and I figured this was more than enough. So, most people who use an online travel agent will have no idea that the ticket is actually refundable. Further, even if they do somehow figure it out, they’ll have to call up the online agency and find someone who is capable of reading this and processing the refund. Not only is that likely to be near impossible, the online travel agents don’t want to deal with that, so they probably have no interest in changing programming to more prominently show the new refundability. After all, they don’t have the ability to handle all that volume that would be required for processing, and they probably don’t want to develop it.
There are pros and cons to this plan, but this is really United taking a swipe at online travel agents and supporting business-focused agencies. It’s not elegant, and the penalty on traditional agencies who want to change to a lower fare is somewhat annoying, but overall, this may surprisingly help United to present the product it wants to each different booking channel. That would be an impressive feat.