September 20, 2018 / 8:46 PM / a year ago

American Airlines joins rivals in hiking U.S. baggage fees by five dollars

WASHINGTON (Reuters) - American Airlines Group Inc said on Thursday it would raise domestic U.S. baggage fees by $5, joining major rivals in the price hike amid higher fuel costs.

An American Airlines Airbus A321 plane takes off from Los Angeles International airport (LAX) in Los Angeles, California, U.S. March 28, 2018. REUTERS/Mike Blake

The largest U.S. airline said it would hike the price of a first checked bag by $5 to $30 and the second bag to $40 in the first price increase since 2010.

Other U.S. airlines, including Delta Airlines Inc, United Continental Holdings Inc and JetBlue Airways Inc, have also announced price hikes recently.

The moves come at a time when Congress is considering whether to require the U.S. Transportation Department to assess if airline baggage and ticket change fees are “reasonable and proportional.”

Airlines have cited rising costs as a concern, with high fuel prices and bumps in salaries and benefits for pilots, flight attendants and mechanics pushing up operating expenses.

In July, American cut its 2018 earnings forecast for the second time after it reported a 34.5 percent drop in quarterly profit, hurt by higher fuel costs.

U.S. airlines’ revenues from baggage and reservation-change fees increased from $5.7 billion in 2010 to $7.5 billion in 2017. Other fees are not reported to regulators.

United Airlines Chief Executive Oscar Munoz defended the price hikes last week, saying they were the first increases in eight years.

Southwest Airlines Co, the No. 4 U.S. airline, has said it would continue to allow passengers to check two bags and does not charge reservation-change fees.

U.S. House of Representatives and Senate negotiators have been holding lengthy talks on a compromise bill to reauthorize the Federal Aviation Administration, which could be unveiled as early as Friday. Congress faces a Sept. 30 deadline to extend the FAA’s operating authority.

In May, the U.S. Transportation Department opposed provisions in a bill approved by a Senate panel that would require new rules prohibiting unreasonable airline fees, arguing it would mark a return to the pre-1978 era before airline deregulation.

Airlines for America, an airline trade group, has said the fee provision would result in “government-mandated price controls” and should be rejected.

American Chief Executive Doug Parker told reporters last week that if Congress moved to regulate ticket-change fees, the airline would likely stop selling nonrefundable tickets that could be changed to a new flight.

American’s increase in the baggage fee will be effective for tickets bought beginning Sept. 21 for travel in the United States and other North America and Caribbean destinations, the airline said.

Reporting by David Shepardson in Washington and Arunima Banerjee in Bengaluru; Editing by Maju Samuel and Matthew Lewis

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