Why standby fees are a lose-lose for airlines and consumers

By | January 22nd, 2016

This story could have been worse. But it could have been better.

One of my more easygoing clients, who has some status with United Airlines, but none with American Airlines, was flying from New York’s LaGuardia Airport to Miami. As it turned out, a meeting that finished early, a light traffic day, and a good Uber driver got him to the airport almost three hours in advance of his 5:15 p.m. flight.

He called me to ask about other flight options. As it turned out, there were two earlier flights; one that would have required a run to the gate, and another in about an hour and a half, which was less than half full. Now, American, like many airlines, generally charges for standby, but I suggested he politely ask at the gate.

In his favor, I thought, beside the fact that he is a nice young man, the later flight he was on was closer to being full. He also had a decent aisle seat on that later flight. Since American also charges for most of their pre-assignable aisle and window seats, I figured he had a decent commodity to trade. Plus, my feeling always is that you never know what can happen with a later flight, and it’s one less potential problem for the airline.

At the gate, the agent told him the 3:45 p.m. flight did indeed have plenty of space, but that it would cost $75 to get on it, even in a middle seat. Since the client is not wealthy and was paying for the ticket himself, he declined and waited at the airport. The earlier flight took off, on time, with empty seats.

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The later flight, however, was delayed. Not too much at first, but then it sat on the tarmac for about 45 minutes, while, apparently, they dealt with some issue. My client texted me that they were not explaining the problem, but passengers were wondering if this was going to be a major delay or even a cancellation.

The plane did take off, made up time, and was only about 20 minutes late landing. Fortunately, my client didn’t have a connecting flight, although the delay didn’t make the prospect of his early morning interview any better.

Again, it could have been much worse. But I wonder why airlines are such sticklers over standby, when it benefits both them and the passenger to be flexible? Understandably, when a plane is nearly full, it can potentially delay a flight to wait to see about extra seats, and then there’s the whole last-minute boarding process. But when a plane has many empty seats, the change can be made quickly and easily.

Airlines do sometimes waive fees for more elite customers, which makes sense from a loyalty perspective, but doesn’t address the times when it’s better for both the passenger and the carrier to get the passenger out on the first available flight.

A side note here: Southwest Airlines advertises, “No change fees,” and technically they are right. But Southwest’s standby policy, which they also usually won’t waive, is to charge the difference between the fare paid, and the last-minute fare, which sometimes means the cost can be substantial.

Then there’s the airlines’ stated goal of encouraging people to buy more expensive changeable tickets. I get it, but while they might lose money in waiving a standby fee, carriers can also lose money if a later flight is seriously delayed or canceled. And it can take serious time – which is money – for their personnel to rebook passengers in those cases. This is especially with missed connections.

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The list goes on: Another canceled or delayed flight could suddenly result in a passenger’s originally ticketed flight being overbooked. Or there could be a seating issue. Or a weather-related delay, or some other airport issue could happen.

And, of course, there’s always that goodwill, which is priceless. My client’s comment to me, after American said that there was no way they could waive the fee, was that they did make him appreciate United.

But I guess goodwill doesn’t show up in the balance sheet. Fees do. And airlines wonder why passengers hate them!

  • Don Spilky

    I’ve found that it depends on the gate agent. I’ve had times where I’ve been rebooked with a smile and other times where the $75 change fee was insisted upon.

  • Cathy_Disqus

    A Southwest agent explained the stand-by fee to me once. Too many business travelers were purchasing cheap seats on late flights, and then going stand-by on earlier flights where that cheapest fare was never an option, thus costing the airline some revenue.

    Southwest does have a policy of free stand-bys if the flight you were originally booked on is going to be something like 45 mins late and the one you want to stand-by on would get you there earlier.

  • Southwest used to have a really rational view of standby. On one consulting assignment I commuted PHX-BRB, a route on which WN has hourly service. I would always schedule my return flights at Burbank to allow for LA traffic and as much work as might be needed in a long day. But often I found myself back at the airport in time for an earlier flight. Since my reservation was always for a late, crowded time of day, Southwest benefited from being able to rebook me on a flight with empty seats about to depart, for they now had a seat on the original flight they could resell for more.

    But apparently there is no little win-win kindness that bean counters can’t replace with a “policy” that passengers hate and which causes the carrier to make less than before.

  • BubbaJoe123

    This is a pretty simplistic view of whether standby fees benefit the airline.
    Unless the later flight is actually going to be oversold, there’s no revenue loss by having the pax take their ticketed flight.
    If pax believe they can stand by for another flight for free, they may start booking the cheapest flight, thinking they can just stand by for another time for free.

  • jim6555

    BRB? That’s Barreirinhas, Brazil. I think you meant BUR which is Burbank California.

  • John Keahey

    Wonder what the airlines’ side of the story is. Unfortunately, the author only quotes the passenger and speculates a lot.

  • Sorry, misspelled that.

    In any case, what I was doing was the opposite of the objection raised above: i was reserving for a more expensive flight at the popular 6 pm time slot, while I at most times arrived at the airport in time for a 4 pm or even 3 pm flight.

  • Jeff W.

    You can almost be certain that the airlines created this policy because too many people (in their eyes) were booking the cheap flights (the ones after 7 PM, for example) and standing by for the more expensive flights (the ones between 4 PM and 6 PM). Those early evening flights are typically priced higher, as those are the ones preferred by business travelers.

  • Noah Kimmel

    worked with one of the smaller major carriers when they removed free standby and $50 confirmed same-day changes. After speaking to the revenue management team, I found out that a significant number of people (enough they could count daily on many routes) would book whichever flight that day was cheapest and use same-day changes, confirmed or standby, to fly the desirable flight, especially for cities with only 2 or 3 daily flights. In addition to not having the lost revenue from people reserving the correct flight, there was the revenue increase as well from the fees.

    typically, if there are delays, gate agents are nice enough to move you. The challenge is when they don’t know if a flight is delayed or oversold.

  • John Baker

    @Cathy_Disqus:disqus That’s exactly what happened at our local hub… Business travelers would book the late, cheap flights and then show up for the flight they wanted. Started costing the airlines hundreds of $.

    When people start to abuse programs, they go away.

  • LostInMidwest

    So, wait a minute … let me see if I get this right …

    1. When people finish their meeting/business/whatever early and have 1-2 hours extra time, they go to the AIRPORT? I could probably name 10 better places to go and spend 1-2 hours of my life in less than 15 seconds rather than going to the airport.

    2. People actually believe they are smart when booking a 8 PM flight and then showing up at 2 PM and trolling the standby lines at the airport for more expensive early flights? While the possibility of waiting at the AIRPORT until 8 PM is very high and looming large? And it was such a problem with so many people doing it that airlines stopped doing it for free?

    People need to start looking around really, really hard and figure out where their life went and go find it and get it again. Yes, as in : go get a life! Unbelievable …

  • KanExplore

    It’s all situation dependent, and I think airlines just don’t want to invest a lot into identifying those cutoff points, which will vary greatly from instance to instance. There are plenty of people who will willingly pay that $75 to get on that earlier flight, and of course those seats may be available to be sold to a paying customer precisely because they haven’t been given away already for free.

  • bicjal

    Now, IF the passenger shows up, ready, able, and willing to fly out early, AND the earlier flight has room AND the airline refuses to honor the ticket as-s for standby AND the passenger is significantly inconvenienced due to delay or cancellation of his original flight THEN, weather notwithstanding, the airline failed to use its best efforts to transport the passenger which is a violation of the contract of carriage.

    Readers of this comment may or may not agree that, if the airline rebooked the subject passenger on its next operating flight, passenger status and flight status notwithstanding, to make up for a cancellation of the original flight and also for any missed connection then the airline will have saved face.

  • Cornhusker

    I have run into the situation where the weather at the connecting or destination airport looks like it might get bad later (t-storms or snow) and sometimes a gate agent supervisor will let me go on an earlier one if I am there early enough and there are seats open. Even if a “weather situation” has not been declared yet…often there are memos sent to station personnel in the morning that refer to the day’s possible weather problems and advising them to be aware. ]

  • MarkKelling

    Did you actually change to a different flight and receive a confirmed reservation at that point where all you had to do was check in to get a boarding pass? Or did you show up at the airport and ask to go standby on an earlier flight than you originally scheduled where you stood around until the last moment before you knew if you were getting on that flight?

    If you did an actual change, yes Southwest is great! You can even do a change for the same day and get money back if the new fare is lower.

    But if you are actually going standby, their rule is you must first upgrade to the full Y fare refundable ticket and then you can stand by hoping to get on an earlier flight. They have never been very flexible on this rule even when there are already issues with weather or other delays.

  • A phony argument on the airlines’ part, because who wants to run the risk of sitting around until 7 pm or after? if that 5 pm flight is the one you really want, you will not, on average, have much luck standing by for it.

  • judyserienagy

    The solution to airline fees and procedures is employee empowerment. I hope that the airlines will figure it out soon. 90% of the population is clueless, but frequent flyers who receive a noogie from a gate agent become even more loyal to the airline. Yahsure, I can hear the accountants screaming “They will screw it up, we can’t give them that power”. But a few errors in judgement will be far outweighed by happy frequent travellers who become or remain loyal.

  • Tom Harriman

    Southwest offers a great option. One can simply buy TWO or even THREE tickets to cover earlier or later flights. You use the one you want, you cancel the ones you don’t 10 minutes before flight time, you get Southwest full credit OR if it’s a Senior fare, full refund. Even better, if you pay with miles, you don’t even have to cancel, if you are a No Show, the miles are automatically re-deposited. Try THAT with any airline with a change fee. Plus you have CONFIRMED status on all your ticketed flights, plus no Standby fee. OK, OK, you say, this hack will convince Southwest to start charging the crazy $200-300 change fees. Maybe, but who does this very often? I did it out of LAX to BWI as I was coming in from NZ in case Customs was slow, so I had tickets for the 1 pm, 2 pm, and 3 pm flights. Made the 1 pm non-stop, cancelled the others ASAP, the miles and the $5 fees were credited instantly.

  • Chris_In_NC

    and how is that “abuse?” The absurdity of the pricing structure is “yield management” itself.

  • Chris_In_NC

    the absurdity of this is the so called “yield management” strategy employed by airlines. The pricing of tickets is no longer related to the actual cost to operate the flight, rather they airlines will price non-stops and “peak times” higher than times with lower demand. While I am not directly passing judgment on this practice, keep this in mind. If you are booking a cheapest flight, there is NO GUARANTEE that you can make another flight, because it may be full.

    Furthermore, turnabout is fair play, and to the airlines, it is not. Suppose I book a flight at 5PM, and pay a $200 premium. Now say that flight is canceled, and the airline rebooks me at the 11PM flight, do I get my $200 back? nope…

  • just me

    There is no rational justification for highway robbery. Why so many people here try to make it? And why we tolerate such behaviour.
    Why don’t I demand tripple wages when my employer comes and asks me to do crash project again just because they do not want to hire more people? So why is it that the airline charges different prices for the same service? Please do not try to answer. There is no such thing a free market. There is skewed market always, and the skewing (no there is no letter missing) is allowed by the people.

  • Ignoring any potential ‘abuse’ by those that book later flights but show up early, both the airline and passenger win if they can be placed on an earlier flight.

    This frees up a seat on the later flight on which they can potential make money on.

    When they pull this BS they lose the loyalty factor with the passenger. Wake up!

  • Asiansm Dan

    Standby doesn’t work anymore because Airlines cut the supply of seats available and load factor is very high nowadays. The worst standby class is First Class.
    Once I travel on a full flexible First Class tickets from Paris to Atlanta and there were around 60 possibilities of combination of non-stop and connected flights from Paris to Atlanta but I couldn’t get on the first 55 flights of the day, on the 56th I could do it because a connecting passenger from Milan missed his connection in Paris.
    I hate Alitalia, but this time I must thank Alitalia for a delay (of somebody else)

  • MarkKelling

    Pricing of tickets has never been related to the actual cost of that seat on that flight. It was even worse during the regulated days where the government picked a randomly high number and said that is what any airline flying that route had to charge.

    And they don’t charge you the $200 change fee to put you on the later flight, so you break even right? ;-)

  • MarkKelling

    Good idea. IF you have either the miles or the credit available to buy multiple seats. Some people don’t.

  • MarkKelling

    The front line employees (and more often now contractors) you deal with at the airports don’t have any ability to be flexible. Yes, that offer would have made more money for the airline than flying empty seats in 1st, but there was no button to push on the ticket machine that said “Enter offered price” so the agent could not make the sale.

    Could the agents at the airport be given that flexibility? I think so, if the airline would hire people who had the ability to think rationally and apply logic to the situations they face. But most often, those hired have been beat over the head with “rules are rules” so many times they fear thinking for themselves because they know they will lose their jobs. Even most supervisors have moved up from the front line just-say-no-crowd and are no better at thinking for themselves when it means not following the rules to the letter.

  • Tom Harriman

    The beauty of Southwest is that all their fares can be bought as one ways, and, if you buy ahead of time for the Wanna Getaway fares, they are anywhere from $50 to $250. If you don’t have that kind of credit available, you are probably not flying much. And the miles required for some of the cheap flights are like 5000, not much.

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