With airline change fees gone, automated reshopping for lower ticket prices can be a real cost saver
By Mark Rowh
Predicting changes in airfares with any degree of certainty seems to be an impossible task. But as prices go up and down, the possibility of monitoring and locking in tickets at the lowest fares could be attractive to any travel buyer. Technology is now making that a realistic option, although perspectives vary on just how far automation has progressed.
Air tickets have been automatically rebooked and ticketed for years, according to Steve Reynolds, CEO of Tripbam. But savings were more difficult to come by compared to rebooking hotel rates because of change fees charged by the airlines. Now however, with airlines scrambling to rebuild demand, these fees have gone away, creating additional opportunities for savings. In addition, a required void window (48 hours in the US or same day in Europe) allows a change at no cost. With all change fees gone, a ticket can be rebooked without incurring additional costs from the airline unless the original booking was a non-refundable, non-changeable fare.
“Hotel rates and air fares are basically the same today,” Reynolds says. “We expect airlines to avoid charging change fees for the foreseeable future to keep demand high and corporate clients happy.”
Zach Ornelas, VP global network sales for UATP, agrees that the lack of change fees has made for greater flexibility and price control for the traveler. "The carrier is obviously missing out on the line item ‘change fee,’ but it is also presumed that the fare offered is profitable for the carrier."
Tripbam first offered shopping support in 2013 with the focus on the hotel industry. Last year, the company ventured into the air category. Tripbam’s automated rebooking solution searches for savings and then rebooks to capture lower fares. Along with the cost savings, the technology offers actionable analytics including performance over time.
Conversely, Tel Aviv-based Fairfly has only recently ventured into the hotel sector after dealing exclusively with air shopping since its launch in 2017. With Fairfly, once a flight has been booked, its algorithms scan the GDS and other sources for price drops and it rebooks the cheaper fare.
While airline change fees have historically been the biggest barrier to air travel reshopping, other factors should also be considered, according to John Pittman, managing director of customer success at ARC. “There are tools that have existed for quite some time that provide agencies and their customers with notifications when prices decrease for air travel,” he says. “That said, with air travel there are reasons why customers and buyers may prefer to provide consent to determine the opportunity cost of the change, rather than automatically accepting it.”
As an example, he notes that a corporate buyer with negotiated rates will likely want to determine the true value of the savings. “There could be up-front concessions like free bags, preferred boarding, commissions, and/or back-end incentives associated with the original ticket that do not come with the lower published fare.” At the same time, the administrative cost of change such as a TMC fee or T&E expense reporting cost could be greater than the actual savings.
"Even with published fares, all new fare rule conditions should be fully disclosed, considered and agreed to before any change is made," Pittman says. He notes that the new lower fare may be a more restrictive category such as basic economy that's non-refundable, non-changeable, restricts seat assignments and/or requires the traveler to board last, among other conditions.
Traveler behavior will always be a factor as well. For instance, travelers flying with co-workers or family may not want to risk losing their seat assignments if the reservation is rebooked in a different class of service. Ornelas points out that even as tools, apps and artificial intelligence all continue to evolve and improve, automation is a bit of a high bar. “Even if a better option becomes available, travelers want a say in making the change,” he says.
Paul Tilstone, managing partner of travel consultancy Festive Road, maintains that the role of rate/fare monitoring is an important one, especially with market fluctuation. “This is something that has seen good traction on the hotel side and we expect to see similar interest air-side,” he says. Of course, such progress comes with its challenges, he notes, including inefficiencies brought by manual processes as well as the considerations around channel choice. “With airlines releasing special fares through specific NDC channels and airlines’ distribution and pricing strategy differing from each other, this adds another level of complexity,” Tilstone says.
With tickets coming in all varieties, not all are offered as fully refundable or transferable, according to Ornelas. He notes that UATP maximizes flexibility through prepaid programs that offer free last-minute changes such as AA’s AirPass or United’s PassPlus programs. "If the originally purchased ticket does offer this flexibility, we would expect the ticket, and fare, to be continually re-shopped," he says.
The reality is that some travel suppliers are better than others at reissuing tickets, says Andrew Menkes, CEO of Partnership Travel Consulting. “Corporate discounts and other metrics make it more complicated.”
Pittman adds that even though the demise of change fees has already eliminated one complication, exchanges with a partial refund are still complex. For instance, travel managers and customers must determine where and how the residual value of a ticket is accounted for. "Every airline has its own rules for how it gets captured," Pittman says.
"These values are often not channel agnostic, meaning they can only be redeemed through the channel in which they were booked.” He notes that travelers purchasing tickets through their TMC will have residual values captured by an EMD (electronic miscellaneous document) or MCO (miscellaneous charges order) although these values likely won’t be accessible through the airline-direct channel. Similarly, residual values from airline-direct exchanges are not available to the agency channel.
For the present, one plus is the wealth of unused tickets. “COVID created a huge amount of airline credits for most companies,” Reynolds says. “They are desperately trying to use them up before they expire.” That means many companies can fly for “free” for most of 2022. “However, they still want these fares reshopped to avoid running out of credits,” he adds. “These credits are applied by the travel agency at time of ticketing automatically.”
Getting On Board While the technology for automated reshopping may be available, that doesn't mean everyone is embracing it. “There are more inherent complexities in the air side,” says Neil Hammond, a partner at GoldSpring Consulting. “If you want to automate that process, it's going to require a lot of cooperation and collaboration between a TMC and a third-party technology.”
In some cases that could be a challenge. In fact, the reshopping process could potentially drive revenue away from the TMC, especially if compensation is based on a commission and revenue is in any way tied to ticket prices, Hammond explains. In addition, this can be seen as another piece of technology which is removing control from its own supply management.
“Automating the reshop in itself is not rocket science, but there has to be an ROI,” Menkes says. He notes that a fee that’s a percent of savings is not tied to cost; it should be the same fee to reshop a round-trip business class as it would be for first class or premium economy. “Each TMC would rather use their own technology and be paid for that work,” he says. “That limits new entrants in the field."
Hammond speculates that while some TMCs are likely to embrace air reshopping in the near future, others will hold back. It really depends on the willingness of some TMCs, and also in some cases the buyers, to push it along and facilitate collaboration. Along the way, travel managers may need to serve as catalysts in conversations among players. "Sometimes your suppliers need to collaborate but their mutual goals are not necessarily the same thing," he says. "You might have to put them in a room and tell them that the customer is the most important thing here."
Other advantages might also be considered. “While reshopping provides significant savings and ROI, the analytics captured on every booking are almost more valuable,” Reynolds says. Was the airline contract applied? Was the discount correct? What was the “true” discount provided by the airline when compared to public fares? Are my discounts as good as they can be when compared to other companies of similar size? Is there a market where I don’t have a discount but should? “We find more savings opportunities through auditing and benchmarking than we do with daily reshopping,” he says.
In pursuing reshopping options, Ornelas advises being flexible. "There remain a lot of scenarios in travel right now that the industry and the travelers alike don’t have control over," he notes. "Flexibility is key to travel success." Ornelas also suggests insuring good customer service. “Check as able, but work with your preferred partners up-front so that the customer service levels are already there," he adds.
That includes staying alert for details that could be problematic. For example, make sure that when a lower fare is found that you don’t lose the seat number if that is important to the traveler, Menkes advises. “I would not want to give up a bulkhead aisle seat for an exit-row window just to save a few dollars,” he says.
Mike Orchard, senior consultant, APAC for Festive Road, suggests starting small. One approach is to search for better fares only while the original ticket is still within the void window. “It can be surprising how much money can be saved initially purely by reshopping during the void window and then expanding that later, once travelers are used to it,” he says.
Orchard also advises to carefully mapping out the user interface and providing proactive advice to air travel users. “As tickets start getting canceled and rebooked, it can generate a lot of extra e-mail to travelers, such as new tickets, updated itineraries and additional payments to the TMC,” he says. “Review and streamline this as much as possible, and hold your traveler’s hand for the rest.”