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American Airlines breaks new ground with bag fee
May 21, 2008 / 8:39 PM / 9 years ago

American Airlines breaks new ground with bag fee

WASHINGTON (Reuters) - American Airlines broke new ground on Wednesday by announcing it will with some exceptions begin charging passengers for all checked bags, a move that experts said would likely be adopted by at least some rivals to help counter surging fuel prices.

American, a unit of AMR Corp, becomes the first to impose a fee, $15, for the first bag and upped existing luggage charges so a passenger who checks two bags in mid-June would pay $80 round trip. That figure is in the vicinity of some bargain fares the carrier offers.

“Put yourself in the bag,” joked fare guru Terry Trippler on what passengers can do to save money on travel costs.

American’s fee for checked bags will not apply to international flights, some of its loyalty members, or people with full-fare tickets.

Trippler called the change inevitable as airlines try to stem potentially crippling financial losses from record fuel prices and other operating costs that have risen unabated this year.

“When people say they are ‘nickel and diming,’ I disagree. This is survival,” Trippler said. “They need to do what they can.”

Domestic airlines fly 600 million people annually and passengers check more than 1.2 billion bags per year, according to government figures.

American did not disclose its share of that total but said it hoped to raise “several hundred million dollars” from the luggage fee and new charges for other services.

Bob Mann, an industry consultant, agrees with other experts that some rivals will follow American, much as the industry fell in behind United Airlines after it began charging a $25 fee for a second bag earlier this year.

Exceptions may be Delta Air Lines and Northwest Airlines, which are in the midst of a proposed merger, and Southwest Airlines Co, which begins charging $25 for a third bag. Mann also said Continental Airlines might be reluctant.

A Delta spokeswoman said the carrier is “looking at every area of our business” to counter fuel prices but has no plans now to charge for a first bag. Northwest, United and US Airways said they would study the prospect. Continental declined comment.

Kevin Mitchell, whose group the Business Travel Coalition represents corporate travel managers, said business travelers want to get through airports fast and do not want their luggage lost, so they avoid checking bags.

While he said the new fee probably would not affect travel decisions at major companies, which can more easily pass along extra costs, he said the majority of business travelers represent themselves or work for smaller outfits.

“They may evaluate this differently,” Mitchell said.

Mark Cooper of the Consumer Federation of America suggested leisure passengers would probably take the fee in stride, but the change could prompt them to pack bigger bags to avoid paying for two.

“From my perspective, what people would like is decent customer service. They want airlines to meet their schedules. They don’t want to be held captive on runways. They don’t want their bags lost,” Cooper said. “That’s what they complain about.”

Mann said “we’ll see some game playing” in the cabin by passengers who want to save money. “We’ll see some people try to take additional stuff on the plane and then fight for the overhead space.”

The U.S. Transportation Department wants more transparency on fees and plans to make airlines and travel agents disclose charges for checked bags in advertisements and before tickets are purchased.

Editing by Gary Hill

Our Standards:The Thomson Reuters Trust Principles.
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