Americans Bag Fees

Image: Silverstock

1 of 2 NEXT

If you ran the airline with the nation’s worst on-time record and one of the worst lost-luggage rates, would you begin charging your customers for the privilege of checking a bag?

You probably wouldn’t, but it’s Gerard Arpey who runs American Airlines, the nation’s largest airline. So beginning next month, American and American Eagle, its wholly owned commuter carrier, will charge most passengers $15 to check a piece of luggage.

As that comic says, you can’t fix stupid. And this fee is going into the Airline Stupid Hall of Fame. Not only will it infuriate flyers—who are already annoyed with American’s lousy operating efficiency and its recent maintenance snafus—it’s likely to further erode American’s on-time and baggage-handling rates. And it probably won’t generate any additional cash for American.

It goes without saying that American needs the scratch. Its $328 million first-quarter loss was, uh, fueled by what the company says was a $665 million year-over-year increase in energy costs. As the price of oil skyrockets, Arpey is so desperate that he’s cutting American’s route network by more than 10 percent, grounding dozens of aging, fuel-guzzling aircraft, and laying off thousands of workers.

To Arpey, baggage must seem like an easy target for quick cash. Many European airlines charge for checked luggage and, in the increasingly à la carte world of U.S. aviation, baggage is the next logical candidate for unbundling. And American did have a moment of clarity: When Arpey announced the $15 first-bag fee at last week’s annual meeting of AMR, American’s parent company, he was careful to exempt full-fare customers (its most profitable segment), elite frequent fliers (its most loyal) and international passengers (who get a mulligan due to competitive and logistical factors). Arpey aimed the $15 fee directly at the travelers who pay the lowest fares and contribute the least to American’s bottom line.

But that’s where rational thinking ended. Arpey set the fee to kick in on tickets purchased beginning June 15, the start of the busy summer-travel season. That means travelers will have to adjust with just three weeks’ notice. American’s frontline staffers have no more of a cushion, since they were only informed of the move a few hours before Arpey publicly unveiled it.

And American seems to have imposed the fee without actually calculating how much revenue it could raise. When asked, Arpey couldn’t say how many checked bags will fall into the charge-to-check category and was vague about the revenue target.

Worse, the customers targeted with the fee are the ones most likely to try to duck the $15 addition by using larger carry-ons. That’s dangerous because these less-experienced fliers (think families and once-a-year vacationers) think any bag with wheels qualifies as a carry-on. It doesn’t. American’s website says the largest acceptable carry-on bag is no larger than 45 linear inches (length plus width plus height) and weighs no more than 40 pounds.

So be prepared for time-consuming arguments at the ticket counters and check-in kiosks. Unless it’s prepared to countenance ticket-counter madness, American will have to deploy additional staff to do the baggage triage. There goes some of that extra revenue Arpey was counting on.

1 of 2 NEXT