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

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.

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.

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!