It was a big enough shock to see airline change fees start melting away, but now there’s something even stranger happening. American is experimenting with affordable, refundable fares on long-haul flights. I suppose we’re at the point where airlines will do anything to try and stimulate demand.
American quietly loaded the fares for sale starting on August 24. It looks like the deadline was extended, but they are now going through September 30. Here’s what the airline says about them:
- Fares are refundable minus a $100 “administrative fee”
- Does not apply to Basic Economy
- Valid for purchase on itineraries from the US to all long-haul markets as follows:
- Atlantic: EU, UK, Norway, Switzerland, Iceland
- Latin America: Argentina, Brazil, Chile, Peru, Uruguay
- Pacific: China, Hong Kong, Japan, South Korea
- Oceania: Australia, New Zealand
What does this really look like in practice? Historically, refundable fares were absurdly expensive. So, let’s just take a look at Chicago to London to see how this breaks down. If you go to aa.com, you see this:
Now, ignore those exact prices. That assumes you’d take a horrible overnight connection on the return to save a few dollars. I instead looked at the 10:50am return on March 17 heading straight back to Chicago which was a bit higher. But do notice that all these fares are “flexible” except for Basic Economy. It’s not entirely clear what that means to an average traveler since it could just mean that change fees are waived. But, I was able to dive in using Sabre.
I decided to price this as it would have been sold on August 20 and then again on September 25. Here are the results using published fares. (We had some private fares that were discounted, but I’ve ignored those and focused on what you’d find on the AA website.)
| Fare Type | Fare on Aug 20 | Refund Fee on Aug 20 | Fare On Sep 25 | Refund Fee on Sep 25 |
|---|---|---|---|---|
| Lowest Basic Economy | $625.15 | n/a | $619.55 | n/a |
| Lowest Main Cabin | $755.15 | n/a | $749.55 | n/a |
| Lowest Refundable Economy | $4,108.15 | $0 | $748.55 | $100 |
| Fully Refundable Economy | $4,108.15 | $0 | $4,280.55 | $0 |
| Lowest Prem Econ | $1,200.75 | n/a | $1,189.75 | $100 |
| Lowest Refundable Prem Econ | $5,592.75 | $0 | $1,189.75 | $100 |
| Full Refundable Prem Econ | $5,592.75 | $0 | $5,582.75 | $0 |
| Lowest Business | $3,650.75 | $275 | $3,640.75 | $100 |
| Fully Refundable Business | $15,500.75 | $0 | $15,490.75 | $0 |
There is quite a bit to unpack here. First, ignore the slight fare differences in some of these. If you see a $10 fare difference or less, it’s probably currency fluctuation on taxes and not indicative of any actual change in the filed fare.
The easy part is Basic Economy. That doesn’t change, and it remains American’s way of saying “no checked bag for you.” It’s non-refundable as well.
But then take a look at coach. You might be doing a double-take wondering how the lowest main cabin fare is actually higher than the refundable fare. I’ll take “stupid legacy things airlines do for $100, Alex.”
Airlines still file fares like they did in the old days, but as different “types” of fares began to exist, they had to figure out a way to shoehorn the new structure into this old system. Behold, the branded fare family. Every airline has its own families, and for American in coach, these are the three options:
- BASIC – Basic Economy
- MAIN – Main Cabin
- MAINFL – Main Cabin Flexible
So, what basically happened here is American left the MAIN fares alone and then filed the refundable fares under MAINFL, some at $1 less than MAIN. That means if a travel agent is specifically looking for MAIN to avoid getting Basic Economy, they might completely miss that there is a cheaper fare with more flexibility.
But I digress. You can clearly see that the old refundable fare was so absurdly high that it would have been hard to sell much of it. Now, with only a $100 penalty, it makes selling refundable fares a whole lot easier.
But this isn’t just about economy. It’s the same dynamic in premium economy, though without the $1 difference. And in business, it’s even more interesting.
Business class fares were refundable with a penalty in these markets. Instead of filing a new fare, it looks like American effectively just changed the tariff to say that it’s refundable minus $100 instead of minus $275, the old regular fare.
The question, of course, is why would American do this? The answer is obvious, especially if you look at the new purchase page.
Americans still can’t travel to any of the countries listed here. Ok, ok, you can travel to the UK with a 14-day quarantine, but that doesn’t really count.
Of course, you may not be able to travel now, but that doesn’t mean by next summer you won’t be able to go. The problem is, people are gun-shy. They don’t want to buy tickets and not be able to go, so they just won’t make a commitment this early. But would you make that commitment if your only risk was a $100 fee? You might. I might.
That’s clearly what American is hoping will happen, and it’s why I assume this has an expiration date. If it does the trick, American may extend it. If not, well, it was a nice try to get some reservations on the books.