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A fair few budget airlines over in Europe have been doing it, but there’s been a shocked reaction this week in the US after American Airlines announced that they will start charging passengers a $15 fee for checked baggage.
The charge starts from June 15, and will apply to all American Airlines passengers who buy a discounted ticket. Exemptions will be for those traveling on elite levels of frequent flyer programs, those who pay full price (that’s rare), and on overseas flights. American had already announced that anyone checking in two bags would be charged $25 for it, but now the $15 charge applies for the first bag, so it’s either a struggle to pack minimally enough to just use carry-on, or a compulsory $15 fee.
The airline is blaming rising oil prices and the weak economy for the need to add the charge, and that’s not all they’re doing - they’re also going to cut their capacity by retiring at least 75 of their older aircraft (because they’re the ones that use more fuel). This equates to around 12% of their daily flights and means that tickets will be harder to come by. Another result is that they plan to lay off thousands of employees as a result of the reduced capacity - they haven’t mentioned any exact figures at all but analysts have figured out that it could be several thousand.
Scarily, other airlines look like they are at least considering follow American’s example: reports have said that United Airlines are “seriously studying” the idea of charging for the first piece of checked baggage. Some airlines like Delta Air Lines are boldly saying they have no plans to do such a thing, but once charging for baggage because the norm at other large airlines, it mightn’t be long until it’s widespread.
For American Airlines’ economic situation, the first result of these announcements was a falling share price - in fact, it tumbled nearly 25%. But no doubt the accountants are keeping an eye on much scarier figures with rising fuel costs and falling passenger numbers, and the share price is the least of their worries. The reaction from the public - not just stockholders - has been similarly negative and many are talking about reducing the number of flights they take. The airline industry has certainly seen a lot of upheaval in the last few years, but perhaps the most dramatic changes are still to come.
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June 19th, 2008 at 6:04 pm
Let’s hope the other major carriers won’t follow suit