Lufthansa is adopting a new policy for ticket flexibility that I can’t help but find to be a little questionable, as flagged by FrankfurtFlyer…
Lufthansa makes flexible tickets inflexible with new fees
Generally when you book an airline ticket, there are many tiers of fares you can book, which offer varying levels of flexibility.
While it’s often outrageously expensive, airlines typically provide the option to book a flexible fare, which is refundable to the original form of payment up until close to departure. Sometimes airlines will have a very small administrative fee to cancel these tickets, but the idea is that these tickets offer flexibility.
For example, take a “First Flex” fare from Munich (MUC) to Chicago (ORD), where you’ll see that under “Refundability” it shows “Allowed,” so the ticket can be refunded at no cost.
However, due to a new policy, Lufthansa Group airlines are now charging significant fees to refund the most flexible tickets in select regions. This policy applies exclusively to flights that are to & from Asia Pacific (excluding China, Japan, Malaysia, and Singapore), along with flights to South Africa, Mauritius, and the Seychelles. So as you can see, the rollout of this is limited so far.
If you’re looking for a cash refund on the most expensive (flexible) tickets in the above regions, you’ll now pay the following:
- Economy tickets have a €400 fee
- Premium economy tickets have a €700 fee
- Business class tickets have a €1,000 fee
- First class tickets have a €1,500 fee
What’s Lufthansa’s motive for this policy change?
It goes without saying that airlines don’t actually want customers to refund their tickets for cash. At the same time, the whole reason for offering tiered fares is to provide incremental perks in exchange for a higher ticket price.
Ticket flexibility is something that people value, especially business travelers, and Lufthansa is countering the trend by not offering flexible tickets. For example, if a corporation needs to book a ticket for an outside contractor but isn’t 100% sure if the trip will happen, then a large cash fee to refund could be a big deterrent to book with that airline (since you don’t value that traveler being able to use the ticket value as a credit toward the cost of a future journey).
It’s interesting to note the markets that this is initially being implemented in, as these are regions that aren’t part of any major joint ventures. That’s often how airlines test new things on long haul routes, before extending it further.
So, what’s the logic here, especially with Lufthansa doing this while competitors don’t? I have to imagine that this is a trial, and that Lufthansa will likely be considering several factors:
- Will a fee to refund tickets greatly decrease demand for flexible fares? If so, will it cause people to book travel on other airlines, or just to choose a different type of fare?
- Is this new policy intended to address concerns over people booking refundable tickets in order to “hold” seats (for one reason or another), with people consistently canceling at the last minute?
Fully redefining the concept of flexible tickets doesn’t set a great precedent. Higher fares are almost like tiered insurance policies, where the cancelation “co-pay” decreases as you buy more expensive tickets. However, it has typically been that the most expensive fares give you no “co-pay,” hence them being branded as “flexible,” rather than as “slightly cheaper to cancel than other fares.”
Bottom line
Lufthansa is taking the concept of flexible tickets to a new low, with a €400-1,500 fee to cancel these tickets and receive a refund. This is initially being implemented in select markets that don’t belong to any of the major joint ventures, so I have to imagine that the airline is looking to eventually expand this further.
One wonders to what extent customers will be interested in paying a big premium for a top-tier fare that doesn’t even let you refund your ticket for free.
What do you make of Lufthansa’s new approach to ticket flexibility?
