Americans Bag Fees

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Then there’s the stress that more carry-on bags will cause at security checkpoints. Fliers who would have normally checked their lotions-and-potions and other troublesome checkpoint items will now have them in their carry-ons. That’ll mean more time spent preparing for the screening process and clearing security.

Once these slowed-down, baggage-laden fliers reach their departure gate, they’ll run into dozens of other travelers who’ve also maxed out their carry-on allowance. With airlines running 80 percent full, that means a free-for-all for available carry-on space. American’s overworked flight attendants will have to police the planes, often going row by row to ensure that travelers have loaded bins effectively and used their under-seat space. That’s sure to delay flights—American ran an industry-trailing 62 percent on time in March—and delayed flights cost money. There goes more of Arpey’s $15-a-bag revenue stream.

But, wait, it gets worse. No matter how efficiently passengers and flight attendants arrange luggage, some passengers probably won’t have room to stow their gear. That means American’s gate agents will be required to gate-check the extras. That’s a time-consuming process. An agent must get a luggage tag, affix it to the bag, then hand it off to a baggage handler on the ramp, who must then stow it in the belly of the aircraft. More time lost.

How much time? No one really knows, but an international airline executive tells me that his flights have run an average of 15 minutes later since the carrier adopted a pay-for-bags system two years ago. “I don’t know how much is due to extra carry-on bags, but it’s a factor. It’s eating into the ancillary revenue we get from the baggage charges.”

Now the big fly in Arpey’s revenue ointment: The high cost of delayed and lost baggage created by too much carry-on luggage. Delayed flights mean missed connections and missed connections mean more of what the industry euphemistically calls mishandled bags. (American already mishandles 7.32 bags per 1,000 passengers; American Eagle’s rate is 13.08 per 1,000.)

My sources tell me it costs an airline about $60 in labor costs and trucking fees to return a late bag to a customer. That means each additional delayed bag American creates will wipe out the revenue of four checked bags. And woe to American if it loses more bags. Airlines are on the hook for as much as $3,000 in liability for lost luggage. Carriers rarely pay fliers that much, of course, but let’s say a lost bag eventually costs American $2,250 in cash payouts and administrative costs. At that rate, each additional bag that American loses will wipe out the revenue from 150 checked bags.

Like I said, you can’t fix stupid. You can only wait for Arpey to realize that charging $15 for a checked bag isn’t enough. Then he’ll raise to it $25, leading even more customers to try to fly only with carry-on bags, thus starting the cycle all over again.

The Fine Print…

None of American’s direct competitors—United, Delta, Northwest, Continental and US Airways—have yet matched the $15 checked-bag fee. But history indicates that they will. On the other hand, Southwest Airlines, the industry’s only profitable major carrier, has announced that it will continue to allow travelers to check two bags for free.

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