Making sense of American’s baggage policy

Following American’s game-changing decision to charge for all checked bags, what we all want to know is: What will happen next?

On my way home Wednesday, the only thing I could think about was American’s decision to charge passengers for all checked baggage. This policy is truly game-changing because American has ventured into sacred territory by collecting revenue from a service that has always been free. To call it a service, of course, is arguably misleading, because checking baggage is an unavoidable aspect of air travel for most passengers.

It’s important to note, however, that no matter how much consumers dislike American’s move (and, judging by some of our readers’ comments, it’s pretty unpopular) the airlines simply aren’t making money these days, almost entirely due to astronomical fuel prices. According to the Wall Street Journal, record crude oil prices ($133 a barrel) are certainly the root of the issue, but the “price of crude oil is exacerbated by a further problem. Refiners currently charge up to $36 a barrel to turn crude oil into jet fuel; by contrast, a few years ago, they charged just $3 to $5 a barrel.” That means jet fuel effectively costs $160 a barrel, up from $88 last year and $30 six years ago. One could argue that exorbitant executive salaries and other poor business decisions aren’t helping the airlines’ bottom lines, but the situation begins and ends with the price of fuel.

Which brings us back to the passengers, because the rising price of oil shows no signs of slowing, meaning airlines will continue to search for new revenue streams. Carriers have already added or increased change fees, instituted extra charges for preferred coach seating, and adopted pay-as-you-go onboard dining. One option they haven’t tried, an idea which, until yesterday, would have been blasphemy, is to charge for carry-on bags. Has the industry really fallen so far that it isn’t crazy for me to suggest this?

For the time being, competing carriers will consider a policy similar to American’s. According to the AP, United is “seriously studying” a fee of its own, and you can bet other airlines are doing the same. Delta said it has no plans at this time, and maybe that bodes well for the immediate future. American’s move is bold, perhaps too bold for other airlines to match.

One thing consumers should bank on is airlines trimming capacity wherever they can, eliminating unprofitable routes and reducing flights on marginal ones. This, of course, will lead to crowded planes, less seat availability, and higher prices. But to paraphrase my colleague Tim Winship, it’s better to put up with the airlines than to lose them, right? Regardless, if the business is going to survive, it looks like we’ll have to pay up.

By Carl Unger

Contributing Editor Carl Unger believes that every trip is worth taking. He loves an extended trip to Europe as much as he enjoys exploring the towns and landscape near home. Basically, you'll find him wherever there is good food, fresh air, and plenty of stories to bring home.

Carl has been writing for SmarterTravel since 2005. His travel writing has also appeared on USA Today and the About.com Boston travel guide.

The Handy Item I Always Pack: "It's not revolutionary, but a small Moleskine notebook is my one travel must-have. It's great for noting things you want to remember and it takes up hardly any space in your bag."

Ultimate Bucket List Experience: "Japan. I'd love to take a month off and visit the cities, temples, and countryside. I'm fascinated by the country's juxtaposition of ancient traditions and modern ambitions."

Travel Motto: “Why do you go away? So that you can come back. So that you can see the place you came from with new eyes and extra colors. And the people there see you differently, too. Coming back to where you started is not the same as never leaving.” –Terry Pratchett

Aisle, Window, or Middle Seat: "Window."

Leave a Reply

Your email address will not be published. Required fields are marked *