What is Airline Policy?


Example entry (usage)	When a flight is changed: The airline policy dictates the change fee and any fare difference. When luggage is checked: The carrier policy sets the fee and weight allowance for checked bags.
Different from	Travel policy: What your company allows employees to book and expense. Alliance rules: Reciprocal benefits (status, lounges) agreed upon by partner airlines (e.g., Star Alliance, SkyTeam).
Also known as	Carrier policy, fare rules, airline rules
Branch	Supplier rules, travel policy context
Common in	Corporate travel programs, fare negotiations, booking and rebooking decisions

What Is an Airline Policy and Why Does it Drive Costs?

Airline policy is the collection of rules an airline uses to govern how tickets are sold, changed, refunded, and used by travelers.

This matters because airline policies decide what happens when a traveler changes a flight, checks a bag, misses a connection, or asks for a refund. For example, one airline policy might allow free same-day changes, while another charges a fee or bans changes entirely on basic fares, directly impacting your total trip cost.

In business travel and expense management, airline policies interact with your own travel policy. Together, they shape which fares you approve, how flexible trips are, and what extra costs (like bags or changes—often called ancillary fees) you need to budget for. Modern tools like Navan help you navigate these policies at booking time, so travelers are not surprised later.

The Key Components Governed by Carrier Policy

An airline's core policies define the parameters of the ticket, the traveler experience, and what happens when things go wrong. Knowing these sections is essential for corporate sourcing.

Fare and Ticketing Conditions

These rules determine the commercial value and flexibility of the ticket:

Change Fees/Rules: Penalties and processes for modifying dates, times, or routes.
Refundability: Whether a ticket is eligible for a cash refund or only credit.
No-Show Penalties: How the airline treats a traveler who misses a flight without prior notice.
Advance Purchase: Requirements for how far in advance a fare must be bought.

Baggage and Seating Rules

These rules are the source of most common ancillary fees and traveler frustration:

Checked Bag Allowance: Number of free checked bags, maximum weight, and size.
Carry-on Policy: Rules for the size and number of items allowed in the cabin.
Seat Selection: Fees for standard seats and priority access fees for extra-legroom seats.

Disruption and Legal Obligations

These rules dictate the airline's behavior during Irregular Operations (IRROPS):

Rebooking Rules: The process for automatically rebooking travelers after a cancellation or delay.
Compensation and Care: Provision of meals, hotels, or financial compensation (often tied to regional laws like EU261).
Conditions of Carriage: The legal contract between the airline and the passenger that outlines liabilities and responsibilities.

Why Aligning Airline Policy with Your Travel Policy is Crucial

Companies that proactively understand and design their own travel guidelines around airline policies typically see fewer surprise fees, better traveler morale, and more accurate financial forecasting.

Fewer hidden costs: By knowing baggage, change, and seat fees upfront, you can mandate fare types that bundle services, controlling the total trip cost.
More accurate budgeting: You can forecast the total expense, including expected change fees for roles (like Sales) that travel frequently or unpredictably.
Stronger negotiations: When you know exactly how flexible an airline's base policy is, you can push for more corporate-friendly terms on key routes and specific fare types.
Improved compliance: If your internal travel policy is aligned with realistic airline rules, travelers are less likely to break it out of necessity or ignorance.

What are some common misconceptions about airline policy?
"All flexible economy fares are the same." In reality, one airline's "flex" may include free changes; another's may still charge a fare difference. "My company contract overrides the fare rules." Core fare rules still apply; the contract often only provides discounts or slightly reduced fees. "The airline always provides a hotel if the flight is canceled." Airline policy for weather-related cancellations often limits liability; compensation is often driven by law (e.g., EU261), not policy alone.

What are some common misconceptions about airline policy?

"All flexible economy fares are the same."

In reality, one airline's "flex" may include free changes; another's may still charge a fare difference.

"My company contract overrides the fare rules."

Core fare rules still apply; the contract often only provides discounts or slightly reduced fees.

"The airline always provides a hotel if the flight is canceled."

Airline policy for weather-related cancellations often limits liability; compensation is often driven by law (e.g., EU261), not policy alone.

Practical Scenarios: Airline Policy in Action

The reality of airline policy hits when a ticket needs to be changed or a flight is disrupted. These scenarios show why visibility is critical.

Scenario 1: Choosing the Right Fare For a Sales Team
A sales rep has a high chance of meeting changes. Your travel manager: Sees that a flexible economy fare costs $80 more but allows free date changes. Compares this to historical change fees (typically $150-$200) for that role. Decides that on key routes, flexible fares are in-policy for sales, saving the company money over time and reducing expense report headaches.

Scenario 1: Choosing the Right Fare For a Sales Team

A sales rep has a high chance of meeting changes. Your travel manager:

Sees that a flexible economy fare costs $80 more but allows free date changes.

Compares this to historical change fees (typically $150-$200) for that role.

Decides that on key routes, flexible fares are in-policy for sales, saving the company money over time and reducing expense report headaches.

Scenario 2: Managing Baggage Costs For a Project Team
A project team regularly flies with tools and heavy bags. One airline's carrier policy includes two free checked bags on the corporate deal. Another airline’s "cheap" base fare charges for any checked bag ($50 each way). The company makes the first airline the preferred carrier for that route because, all in, the total trip cost is cheaper and the process is simpler for the travelers.

Scenario 2: Managing Baggage Costs For a Project Team

A project team regularly flies with tools and heavy bags.

One airline's carrier policy includes two free checked bags on the corporate deal.

Another airline’s "cheap" base fare charges for any checked bag ($50 each way).

The company makes the first airline the preferred carrier for that route because, all in, the total trip cost is cheaper and the process is simpler for the travelers.

Scenario 3: Handling a Disruption
A flight is canceled due to bad weather. Airline policy says they will rebook on the next available flight on their own metal. The traveler, through 24/7 support (such as Navan), asks if they can switch via a different hub or possibly move to a partner airline. Knowing the policy and contracts, the agent gets the traveler re-protected in the best way that is still compliant with the airline's IRROPS rules.

Scenario 3: Handling a Disruption

A flight is canceled due to bad weather.

Airline policy says they will rebook on the next available flight on their own metal.

The traveler, through 24/7 support (such as Navan), asks if they can switch via a different hub or possibly move to a partner airline.

Knowing the policy and contracts, the agent gets the traveler re-protected in the best way that is still compliant with the airline's IRROPS rules.

Common Challenges and Solutions for Travel Managers

Challenge	Root Cause in Airline Policy	Solution for Travel Management
Traveler Sticker Shock	Employees book basic fares and are surprised by high change fees later.	Use booking tools (like Navan) that translate complex fare rules into simple "Changeable Y/N" flags at the point of sale.
Hidden Ancillary Costs	Budget owners only see base fares and are surprised by fees for bags, seats, and priority boarding.	Require travelers to book fare families that bundle essentials, or track ancillary fees as a separate KPI to expose the true cost per airline.
Policy Conflicts	The internal travel policy demands free changes where no airline offers them at the company's price level.	Review and update your travel policy to reflect real-world carrier policy options by setting realistic guidelines by role and route.
Inconsistent Disruption Handling	Employees get different rebooking/compensation answers depending on the gate agent they speak to.	Partner with a TMC or platform that standardizes how IRROPS policies and corporate contracts are applied by trained agents.

Aspect	Airline Policy	Travel Policy	Fare Rules
Owner	Airline	Your company	Airline
Scope	Ticket rules, baggage, changes, conduct (Conditions of Carriage)	What employees may book and expense, cost control, safety, Duty of Care	Detailed, line-by-line conditions attached to one specific ticket
Focus	Protecting airline revenue & operations	Controlling cost and ensuring compliance/safety	Spelling out specific penalties and entitlements for a single transaction
Relationship	The big rulebook for the carrier	The rulebook for your employees	Sits under airline policy, showing up at the ticket level