Sunday, June 03, 2007

Make the most out of airfares

I came to know this only this week: many airlines (in the U.S.) will refund if the price drops after you bought a ticket.

clipped from
Few customers realize it, but many airlines will give refunds if they cut the price after you have bought a ticket. Alaska, JetBlue, Southwest, United and US Airways all offer vouchers for the full price difference -- if the price drops $200, you can get a $200 coupon towards a future trip. Others offer vouchers, or cash, after deducting change fees (which can run up to $100). In industry jargon, it is called a "rollover," and in most cases it only works if you bought the ticket directly from the airline. (It generally won't work if you bought them via a Web site such as or, unless the price drops in the first 24 hours.)

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Even though the process is not that straightforward, I would think this helps many people in making purchase decision early - knowing they can get refund if the price drops. Especially with the help of websites like

Customers are the ones who benefit from this, I suppose.

Will the airlines lose their profits (they barely make profits even now) if more and more people claim for refunds (assuming no price increase)?

Logically, they will (lose profits), won't they? But I find it too hard to believe.

The airline yield management is already complicated (yet very interesting). If more customers claim their refunds, it gets more difficult for the airlines to price discriminate. There are more parameters or assumptions to be considered.

That said, some airlines have already made it difficult like change fees. They also have the question whether services like Yapta is a good thing.

What if it is not? They can push the "base" price up, and entertain every single refund nicely. Perceived as "good value" by customers yet still receive the same level of profits. It's all about perception anyway.

Or switch to everyday-low-price style of Wal-Mart (low cost airlines like Southwest still cut prices, if I'm not mistaken). Which would be nearly impossible in the airline industry.

Well, just like
gasoline price, I think airplane passengers will still pay high price on average...