What are the net costs to airlines for moving passengers to earlier flights?

Question

Sometimes, if you are very early for a flight and have no checked bags, and there is another flight on the same airline going to the same destination with empty seats available, you can politely ask the gate agent and they can add you to a standby list for those empty seats.

In general, I tend to think of this as being helpful for the airline. If they wind up having other passengers coming in late, missing connections, etc. they then have more flexibility to use that vacated seat on the later flight, to meet their obligations and/or increase customer satisfaction. Also, it sometimes happens that the original itinerary flight winds up delayed causing missed meetings, connections etc. while having the customer on the earlier flight means that they are more likely to be successful in that journey. Maybe the passenger can't rely on arriving at the airport early enough to take that earlier flight and so did not book it, but if conditions change and they did arrive (past security) in plenty of time (this may be because the first flight was delayed), and room is available and there are no checked bags, it seems that putting the passenger on the earlier flight (with the passenger's permission/request) would be mutually beneficial.

Some airlines allow this without any extra fees; some charge significant fees for it unless the passenger has elite frequent-flyer status. Those that charge significant fees indicate that the change causes significant extra costs for the airline. What are those costs? How do they compare to the potential benefits to the airline?

(For this question, assume that the ticket was booked in Economy class and the earlier flight has seats available in Economy class).

Answer 1

The actual monetary cost to the airline of putting you on a different flight, later or earlier is, let's just say not really a factor.

This is more a case of revenue management or enhancement over anything else.

Because the value of the earlier flight is higher to the customer than the airline, the airline has determined, correctly, that passengers are willing to pay for the privilege. If the customer is willing to pay, no reason to leave that money on the table.

It also serves as form of price protection. If the earlier, or later, flight is generally more desirable, the ticket price will be higher. They don't want passengers paying for the lower fare flight, then taking the higher fare flight without paying something for that privilege. Otherwise, it's lost revenue.

Waiving those fees for frequent travelers is a benefit designed to keep you flying with them. The 'lost' revenue for that benefit is more than recouped through additional ticket purchases.

A prominent outlier in the Standby model is Southwest. But, that has more to do with them having no change fee. They will happily change your flight to anything you want, you just pay the difference. Essentially, they don't have traditional Standby at all. For clarity, they do offer fare protection in a 2 hour windows for A-List members.

Finally, staff do have some flexibility to waive any fees if there's operational justification for doing so. If flight B is significantly delayed, pax can be moved to flight A. Yes, this is mutually beneficial since the passenger is underway sooner and downstream effects, missed connections etc, are mitigated.

Answer 2

It's primarily lost revenue. A few people will actual pay the change fee and if the airlines would do it for free, they would lose these fees.

It's also a marketing tool to advertise premier member benefits that actually doesn't cost the airline anything.

On the other hand, giving away the benefit for free and make the customer happy could also be counted as a marketing benefit.

It's all part of the frightfully complicated revenue optimization systems that the airlines use.