I’m feeling pretty lucky to be living in Southern California these days. Oh sure, it’s the beautiful sunshine and all that, but it’s also about to become a nice little hub of cheap flights. I say that because airlines are starting to get into an old-fashioned turf war here. That inevitably leads to stupid decisions pushing too much capacity into the market. And you know what that means… cheap fares to try to fill all those seats.

While we really can’t forget about Virgin America’s decision to become the sixth nonstop carrier in both the LA to Vegas and San Jose markets, the bulk of the brawl has been between American and Delta. United seems to be sitting and watching the others fight it out while Southwest probably can’t grow much even if it wanted to until it gets more gates. Though I do have to note that Alaska and Delta have been slapping each other a little as well.

Reminiscent of World War I, this fight started from seemingly minor events. Consider American’s launch of nonstop flights between LA and Raleigh/Durham to be like the assassination of Archduke Ferdinand. (Yeah, yeah, it’s a stretch. Work with me here.)

Last December, American announced it would start a daily nonstop between LAX and Raleigh/Durham on April 2 of this year. That’s a market that Delta had to itself. So it wasn’t a surprise when just a few days later, Delta announced it would begin flying from LA to Nashville on April 8.

Yes, American flies the LA to Nashville route, and it’s the perfect way for Delta to say, “Hey man, if you’re going to make this already marginal route horribly unprofitable by adding unnecessary capacity, then we’ll do the same for you.” At least, that’s how I read it.

In the meantime, Delta quietly started adding random routes here and there from LA. To me, most of these looked like a bunch of unrelated moves that were trying to take advantage of pockets of opportunity. But at some point, Delta realized that it had added enough service that it could position this to look like a big LAX expansion. On March 6, the airline put out a press release lumping all these changes together:

• Daily to Nashville on April 8
• Thrice daily to Seattle on April 8
• Daily to Boston on June 10 (summer only)
• Thrice weekly to Anchorage on June 21 (summer only)
• Weekly to Bozeman on June 22 (summer only)
• Four times daily to San Jose (CA) on July 1
• Daily to San Jose (Costa Rica) on July 1
• Daily to Spokane on July 10
• Additional flights to Guadalajara, New Orleans, Oakland, Phoenix, Puerto Vallarta, and Sacramento

American apparently got jealous that Delta was growing in LA and decided to launch an expansion of its own. I call it the “Let’s Lose a Bunch of Money Before New Management Comes In Tour – Summer 2012.” This round of growth was announced on April 10.

• Twice daily to Eugene (OR) on June 12
• Daily to Redmond/Bend (OR) on June 12
• Daily to Columbus on August 27
• Daily to Indianapolis on August 27
• Daily to Hartford on August 27
• Daily to Northwest Arkansas on August 27
• Daily to Pittsburgh on August 27

After that move, Delta quietly bumped up its nonstops in Columbus and Indianapolis to be daily year-round. As someone with in-laws in Indianapolis, I support this move. If the airlines want to lose a bunch of money on routes I use, then that sounds great to me. Stupid, but great.

But wait, there’s more. Though it doesn’t center around LA in the same way, there have been some interesting moves between Delta and Alaska as well. Did you notice that Delta flight from LA to Seattle? That seems strange considering how closely the airline is tied with Alaska Airlines, but it’s just one of many moves where the airlines are stepping on each other’s toes.

Last November, Alaska announced it would start Seattle to Salt Lake. Delta announced LA to Seattle was coming back in December. In February, Delta announced its LA to Anchorage flight and it upped capacity on the LA to Seattle run. Later that month, Delta decided to fly from Seattle to Anchorage and Vegas. This month, Alaska decided it would fly Portland to Atlanta (and Dallas to the home of its other major codeshare partner). Then in the last week, Delta added yet another couple flights in the Seattle – LA market. It also announced service from LA to Portland. Fun stuff, huh?

Am I really suggesting that these moves are all meant to target each other as tit-for-tat moves? Of course not. But on the broader spectrum, this is definitely a fight. No airline dominates LA. In fact, you have a big presence from just about everyone in LA, and from time to time the airlines jockey for position. This is one of those moves where Delta and American are both trying to be “LA’s carrier.”

In its press release, Delta noted that this “positions Delta to be Los Angeles’ preferred carrier.” American said the “Los Angeles hub plays a vital role in our domestic and international network strategy,” and then it even included a quote from the Mayor of LA to give the airline even more street cred (or lack thereof). As for Alaska, the airline has already made a claim for LA by moving to a new terminal and strengthening partnerships with both American and Delta (despite the little network fights).

In the short run, there will be a clear winner – travelers. Fares will drop as the airlines realize that they can’t fill all these seats. But that will only be a near-term victory. Eventually, the airlines will abandon the excess capacity and we’ll go back to where we were before. Nobody is going to win this battle for LA. But that apparently doesn’t prevent these airlines from trying.

Just last month, United increased its change fee on domestic flights from $150 to $200 and I bashed the move. That, of course, didn’t prevent US Airways, Delta, and then American from following like sheep. Those increases left a bigger gap between change fees at the legacy airlines and those at the low cost carriers. You can see where this is going right? Yes, JetBlue has now increased its change fee, but it didn’t just use a blunt instrument. It used a little finesse to make it easier to explain to travelers.

Previously, JetBlue had a tiered change fee based on the price of the ticket. Now it’s keeping that structure but adding an extra tier. And fees are going up. Here’s how it breaks down:

As you can see, this means the fee now tops out at $150 whereas it was only at $100 before. For everyone except those who bought tickets worth between $100 and $149, the fee will go up. Well, for the most part, at least.

The fee itself is based on one way fares. So let’s say you bought a roundtrip ticket made up of two one ways of $80 each. Even though the roundtrip ticket costs $160, the fee will be only $75 because the two one way fares were less than $100 each.

Complex? Yes, but JetBlue doesn’t even need to explain that last bit. The benefit always goes to the traveler in the form of a lower fee than what’s expected. So just publishing the three tiers and then having a few people surprised by lower actual fees isn’t bad.

But hold on. There’s nothing new in this that’s great for travelers. Yes, the tiered structure makes more sense. It prevents travelers from being in a situation where the fee is $200 on a $100 ticket, as we see with the legacy airlines. That means people won’t just throw the ticket away, but that’s not a new thing. There is one other piece to this change, however.

JetBlue is now also introducing a variable change fee depending how far out you are from the date of travel. If you make a change 60 days or more before departure, it’s a flat $75 regardless of the price of the ticket. The tiered structure only goes into effect if it’s within 60 days of travel. This is what I really like about this change.

The legacy airlines look at change fees in a fairly one-dimensional way – will there be a net increase in revenue after the change is made? JetBlue, however, looks at the narrative as well. How can it justify the change to a consumer? Will it be something that the consumer will understand and accept?

With this move, JetBlue can tell a story. It can explain how when people change further in advance, there’s a better chance that JetBlue can re-sell that seat before departure. So it will charge a lower penalty when that happens a couple of months out, but when it gets closer JetBlue will charge more because it becomes harder to re-sell the seat.

It sounds good, so consumers are more likely to accept it. And the reality is that it will likely cost JetBlue very little in revenue. How many people make changes more than 60 days in advance? It can’t be that many in the scheme of things. Most changes happen closer to departure. So the number of people who can actually take advantage of this lower fee will be minimal, but it will still benefit the brand to have it out there.

Good work, JetBlue. You found a way to increase your change fee in a way that’s more consumer-friendly. It also will result in a big increase in change fee revenue. Nice job.

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