American Puts Price Tag On Baggage Claim

Airline To Charge $15 For 1st Checked Bag, Cut Flights To Offset Crippling Fuel Prices

(CBS/AP)  American Airlines will start charging $15 for the first checked bag, cut domestic flights and lay off possibly thousands of workers as it grapples with record-high fuel prices.

American plans to cut domestic flight capacity by 11 percent to 12 percent in the fourth quarter, after the peak summer season is over. That's more than double American's previous plans to cut flying by 4.6 percent in late 2008.

Because airlines follow each other's leads, first-bag fees are sure to become an industry standard, reports CBS News correspondent Nancy Cordes.

"This is not nickel and diming," says Terry Tippler of TipplerTravel.com. "This is survival for the airlines."

American has not yet said which routes it's going to cut, but it is inevitable that travelers in some cities are going to find they have to contend with fewer options - not to mention higher prices, adds Cordes.

In a further sign of the problems facing the industry, Southwest Airlines Co., the most consistently profitable U.S. carrier, won't earn as much the rest of this year as it did in the same period of 2007, Chief Executive Gary Kelly said.

American, the nation's largest carrier, said Wednesday the fee for the first checked bag starts June 15 and that it would raise other fees for services ranging from reservation help to oversized bags. The other fees will mostly range from $5 to $50 per service, the airline said.

Last month American announced it would join other carriers in charging $25 for second bags checked for some passengers, but it wasn't immediately clear how Wednesday's announcement would affect that.

Its proposed fee for a first checked bag would exempt people who belong to elite levels of its frequent flyer programs, those who bought full-fare tickets and those traveling overseas.

Amy Ziff, editor-at-large with Travelocity.com, tells CBS Radio News that the baggage fee is another hit to the strapped consumer.

"They're being ... charged more and more for things that used to be free so that’s not easy to swallow as a consumer," Ziff said.

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Travelocity.com's Amy Ziff says the baggage fee comes at a bad time.

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Delta Air Lines Inc. spokeswoman Betsy Talton said the Atlanta-based airline has no current plans to match American's fee for the first checked bag, but is considering all options with oil at $130 per barrel.

Chairman and Chief Executive Gerard J. Arpey said he expects the new or raised fees will raise several hundred million dollars for American, but that was the best estimate he would give.

The changes were being made to adapt to "the current reality of slow economic growth and high oil prices," Arpey said. He said the fees are an effort to get customers to pay for services they want.

Arpey didn't put a figure on the layoffs, but when asked whether he expected the figure to be in the thousands, he said yes.

Arpey said he wants to cut overhead and costs about 7 to 8 percent but declined to say whether layoffs would equal a similar percentage of parent AMR Corp.'s work force of about 90,000.

American Airlines expects to retire 45 to 50 planes, most of them gas-guzzling MD-80 aircraft. Those were the plane grounded for faulty wiring last month. AMR regional airline American Eagle also plans to retire planes.

American said rising oil prices have increased its expected annual fuel costs by nearly $3 billion since the start of the year.

AMR shares tumbled 24 percent, down $1.98 to $6.22, as oil prices shot past $130 per barrel for the first time, signaling even more trouble for the nation's airlines.

Southwest shareholders also met in co-founder Herb Kelleher's last meeting as chairman.

Kelly, who added the title of chairman on Wednesday, said he expects Southwest to remain profitable, as it has in every quarter since early 1991, but not as profitable as in the second, third and fourth quarters of last year.

"I would love for Southwest to grow modestly next year and in 2010, but at this point we're not making any announcements," he added.

Southwest shares fell 57 cents, or 4.4 percent, to $12.43 on Wednesday.

[b-easy63]

CORRECTION:

Now we have local, county, state, federal and FICA taxes. Remember when FICA did not exist and SS and medicaid were all part of the Federal taxes. If people added the two, they''''d find out that they are not in a low tax bracket-they just reshuffled how everyone pays and fooled a lot of people. Same with this--people, this IS a fare increase. Disguised as a luxury tax on those who dare to bring luggage on an airplane (as if they can''''t just wear the CLOTHES they travel in or buy what they need when they get to their destination)

Posted by b-easy63 at 12:17 PM : May 22, 2008

[b-easy63]

The airlines are taking a page out of the "I cheat''''em and how" book used by banks and financial institutions; Posted by walt1944 at 01:18 PM : May 21, 2008

They charge like this because people will pay for it. IN the 1970s advertising and marketing science proved that consumers would pay more if you raised the price for items in little pieces--which is why a 70 dollar suit could be sold in pieces where the pants were 40.00, the shirt 35.00, the jacket 60.00 and the vest was 39.00. The consumer ended up paying twice the price and did not blink. Once they found they could get away with that, every industry started doing it.

Now, you don''t pay higher taxes, you just pay taxes on utilities (we used to not do this) we pay taxes on gas at the pump, we pay higher restaurant tax and hotel tax and user fees and people think they are not paying taxes. We are paying alright--waaaay more than we would if we still had a single source federal and state tax.

Now we have local, county, state, federal and FICA taxes. Remember when FICA did not exist and SS and medicaid were all part of the Federal taxes. If people added the two, they''d find out that they are not in a low tax bracket-they just reshuffled how everyone pays and fooled a lot of people. Same with this--people, this IS a fare increase. Disguised as a luxury tax on those who dare to bring luggage on an airplane (as if they can''t just wear the close they travel in or buy what they need when they get to their destination)

[b-easy63]

Everyone BOYCOTT American Airlines. If you don''t the other big airlines will follow their lead. Don''t fly them no matter what--when they see a huge fall off in customers flying, they will have to rethink where they can get more bang for their bucks.

[lorinkundert]

That''s why I will stay with Southwest, the only airline that is profitable and doesn''t have to resort to extra fees.

[l8c6]

A very good reason to not fly AA. Any airline that encourages more carry on luggage is worth steering clear of. How about charging people for every carry on. I guess as a business, their objective is to reduce the number of baggage handlers. It might work if they''d stop some of the entitled passengers who get by with bringing too much *** aboard.

[l8c6]

Hmm, that means more people will be cramming more sh*it in the cabin.

[brianbwb-2009]

Musicians, who carry articles like electric basses are not allowed to carry them on, we are forced to check them as luggage, and when they are lost, stolen, or crushed, the airlines reimburse according to weight.

Thus a $3,000 instrument can be stolen be the ground crew, the airline will pay $14 per kilo, or around $200 for an instrument that can fetch $1,500 used. This almost forces the airlines into a mafia arrangement with their ground crews to steal as many as they can, because even at a 50-50 split, they make a profit.

Sound extreme? I have had two stolen from me so far, now they want me to pay an extra $15 to have my gear stolen?

I will avoid flying now whenever possible, where before I would fly as much as possible. AA can bite me.

[credibility2]

I wonder how long it will take for all of the other airlines to begin doing this. I would like to see roll-ons banned from the overhead, since they take up too much room and slow the on/off boarding processes. Maybe the airlines should start charging on bringing this mini pieces of baggage on board. I detest flying!!

[samrensho]

I''''m surprised that they haven''''t farmed out the airline crew as well
Posted by davidjones11

Already have here -

Captain: Mohammed Wing
First Officer: Pratap Nassar

[yongamerica]

American Airlines has also installed token slots on the restroom doors. And the tokens can only be bought in 5$ increments at the ticket booth. These tokens can also be used to purchase water and ice in flight.

[andyb62]

So now my lugage won''t arrive when I arrive AND I''ll get robbed of $15. Good plan.

[rushlimpdrug]

This will increase the number of people bringing over-sized bags into the cabin. It slows everything down when they refuse to believe it won''''t fit. Why doesn''''t the gate agent enforce the rule on the size of bags that can be brought on board.
Will the $15 result in improved and faster service when you land?
Posted by CascaisBear at 05:29 PM

Love this post cause it is sooooo true.

People are allowed to bring on board boxcars to fit
into the overhead bin.

Go figure.

[mickimo-2009]

American should put the $15 luggage charge in the price of the ticket. However, let''s remember AA stayed out of bankruptcy and saved the employees pensions. AA is starting to retire its md80 fleet and replacing them with Boeing''s 737 stretch. the 737 is more fuel efficient and holds more passengers. Also let''s not forget what United did to it''s employees and when their pilots walked off, leaving passengers stranded. How about Northwest, who just fired their mechanics and replaced them all with mechanics, who hold FAA licenses, but who may never have worked on Northwest''s planes. I''m going to stick with AA, if for no other reason: safety.

[pugster]

The next thing they would like to do is to charge a $5 premium for a Window seat instead of an aisle seat.

[gce65]

At least it''s refreshing to see Bush admin policy failures impacting a Texas company.

[worldcomment]

Why don''t the airlines actually charge the customers a ticket price that covers the cost of the flight, and include baggage and meals? If the ticket actually paid for the flight, the airlines wouldn''t have to worry about all the incidentals.

If a customer wants to be treated like a sheep and will forego the baggage and the meal, they can fly Southwest, but the reason I pay for "mainstream" airlines is to avoid the bargain basement treatment that matches the fares.

[lock-n--load]

I have an AAdvantage frequent flyer number and have had status and been faithful to this airline for many years. I can not believe the ABSOLUTE STUPIDITY of this newest fee. Because of 9/11 we are allowed to carry nothing useful with us on the aircraft. Now we have to pay to check a bag. Last time I looked, when you took a plane somewhere, you intended to be there for more than one day. What should we do--wear the same clothes every day for two weeks? Do they think that we are not hit hard by these outrageous fuel prices? The only difference is we don''t have a profit margin that is decreasing from the billions to the millions. I truly feel sorry for their loss! I think it is time to find a more intelligently run airline to give my travel $$''s to. American needs to get a grip--their service is not nearly as special as they think it to be--another example of delusions of grandeur. Wake up, American Airlines and smell what you are shovelling.

[goldesprit]

The airlines need to send heavily encrypted email to each other at highest levels, agree to not fly unless fuel prices come down very substantially, and not negotiate at all.

Then, CNN et. al. should ask for lower fuel prices and voila!!

BUT INSTEAD THE OPPOSITE HAPPENS.

CNN TRIES TO WARN US THAT "we" were warned about (automatically expensive) oil.

[naucoming4u]

What new charges will the airlines try to implement next?

- Weight premium. Passengers will be weighed at the ticket counter, and charged a premium for any weight above 150 pounds (for men) and 120 pounds (for women).

- All drinks, other than recycled water, will no longer be free.

- A coin-op bathroom.

What''s next?!

[crystalblue3]

It gets even better. Some airlines are now calling the window and aisle seats "premium" seats and are charging extra for them.

Airlines always sucked and now they suck even more. All because the people at the top of the food chains want to keep making the astronomical amount of money they are already making...with no thoughts to the rest of us.