Ai Editorial: Finding a flexible way to deal with costly airline change fees

Ai Editorial: TicketHop, a start-up based in the U. K., intends to provide a workable solution to provide flexibility when it comes to change fees. Ai’s Ritesh Gupta explores how founder Laurence Shepley is dealing with an issue that tends to be annoying for passengers.

There are certain confrontational issues that are associated with air ticketing and one of them till date is costly airline change fees.

How much does it cost to change or cancel an airfare? What are the conditions that entitle a passenger to amend or cancel their reservation without paying a fee? These questions are common and ones that can leave a passenger disappointed or pinches their pocket in case they decide to change their original booking. It is common to see a full-service carrier in the U. S. charging a $150-$200 change fee for paid domestic flights. 

“Change fees are a significant source of income for airlines: typically 2% of revenue. But they are resented by passengers whose travel plans can change for the best of reasons. Why not share the load and spread the cost across all passengers?” questions Laurence Shepley, founder of a U.K.-based start-up, TicketHop.

Sensing an opportunity, Shepley has come up with a venture in TicketHop. The company’s idea: Rather than getting hit by a penalty change fee, a passenger can pay 5% of the fare price to get cover.  For a small % increase addition to the ticket price individuals who join TicketHop can combat uncertainty around their travel, if any. This way there is flexibility in the manner in which a traveller intends to fly. “We are unique in that we provide a workable solution to provide flexibility when it comes to change fees,” asserts Shepley.

TicketHop intends to introduce a small charge affordable for all the passengers and overall increase revenue generation for airlines. “The plan for the near future is to partner with an airline, so we can progress to building the software and put the idea into action, said Shepley.

Ai’s Ritesh Gupta spoke to Shepley about the new initiative:

Ai: Can you talk about the idea of setting up TicketHop? Was it from a personal experience that led you to start this venture? 

Laurence Shepley: Before the name TicketHop, the idea was called ATEC (Automated Ticket Exchange Club). (It was planned as) a membership that allowed individuals to exchange air fares. It came about when Viagogo another ticket exchange system stopped serving Manchester United. Although not at all related to my idea, I remembered the ease at which individuals could get tickets for a match.

I then began to realise the need for more flexibility within the airline industry, especially when my family was hit by a large penalty to change flights with United Airlines. Why don’t the airlines make money out of something that people want i.e. more flexibility? As we know all airlines over a full fare which does offer this flexibility, however it is far too expensive for the majority. So, I concluded that individuals would pay for it so long as it was cheap.

Ai: How would it work for travellers? Can you cite an example in case of a cancellation? 

Laurence Shepley: Let’s take James. He is going away in six months’ time, however a couple of weeks before departure he must change. He does not have to fear thou as he has his TicketHop cover.

Ai: So how would it work? 

Laurence Shepley: James bought a ticket from an airline (let’s say worth £40). TicketHop then comes along and charges 5% extra (£2) it is cheap enough for James to get regardless of whether he is certain he wants to fly or not on that day. By getting this cover he becomes a member of TicketHop, which allows him to resell his ticket to another member of TicketHop only for the same price he bought it for. There is no profit, just his money back. This process is actually done by TicketHop on his behalf so there is no chance of any misconduct. In the case that no buyer at that time can be found he will receive a voucher from the airline to the value of 100% of the ticket to be used within 12 months with that same airline. This encourages the passenger to return to that airline.

We connect travellers with similar likes this maybe travel or hobby related. Once they have a common ground they are more likely to advise each other on what is a great place to visit destination wise. If say James encourages Ben to go and visit a hotel he has just been to, James could get a commission back from the hotel.

We ask the member what their favourite airline is when they first use the product. If they choose Air India for example, then we will advertise Air India flights on their app. So, all they see is Air India (this does not prevent them searching other flights on the app).

As for affiliate marketing, TicketHop will actively work out what products would best suit that member based on where they are going, which greatly enhances the likelihood of them purchasing. The member can also tailor the type of products that are being shown to them.

They are just some of the areas that TicketHop is looking to get involved in.

Ai: How is it going to enhance value for airlines?

Laurence Shepley: It will result in more revenue generation. As per our plans, 99.5% of the extra charge will be passed back to the airline. This will do more than just cover old cancelation fees. It will greatly increase revenue. By how much you may ask? £4 per passenger. Plus, this will result in more passengers. TicketHop will increase the number of passengers that the airline flies.  Individuals will now be able to book earlier as they become more flexible. But remember the price is so cheap it is very unlikely that you will see an increase in people changing. After all people don’t book a flight just to change.