Airline Travel Turns More Costly May 21, 2008 "AA To Cut Capacity, Add $15 Fee For First Checked Bag" originally posted on www.btnonline.com on May 21, 2008
American Airlines today said it plans a drastic fourth-quarter capacity slash and a new fee for some coach customers to check their first piece of luggage among several initiatives to cope with the growing burden of fuel expenses.
The last of the legacy carriers this year to deploy a fee for checking a second bag (BTNonline, April 28), American today is building on that initiative by introducing a $15 fee for customers to check their first bag. American said it would assess a fee on tickets for domestic travel purchased beginning June 15.
The carrier said it would shield AAdvantage program members who have achieved Gold level and higher, as well as passengers in business and first class and those traveling on international itineraries, except to Canada and U.S. territories.
American expects to achieve "several hundred million dollars in incremental annual revenue" from that and other fees announced today on traveling with pets, oversized baggage and reservation services, including a $20 fee for AA call center reservations and $30 for airport ticket counter reservations.
American today also said it would cut mainline domestic capacity by up to 12 percent in the fourth quarter this year, as it plans to retire "at least 75 mainline and regional aircraft." The revised capacity reductions build upon the carrier's previous outlook, detailed last month, that forecast a fourth-quarter decline in available seat miles of 4.6 percent, compared with the same period last year. American now expects domestic mainline capacity to drop by 6 percent for the full year, compared with 2007.
"The capacity changes will result in workforce reductions at both American Airlines and American Eagle Airlines and could result in facility closures or facility consolidation," the carrier said in a statement today.
American senior vice president of government affairs William Ris at the Association of Corporate Travel Executives Global Education Conference and Corporate Travel World in Washington, D.C., this week said the industry could expect new revenue streams and further capacity cuts this year, since the carrier is bleeding $3 million every day to pay its fuel bill (BTNonline, May 19).
American CEO Gerard Arpey in a statement today said, "The airline industry as it is constituted today was not built to withstand oil prices at $125 a barrel, and certainly not when record fuel expenses are coupled with a weak U.S. economy. Our company and industry simply cannot afford to sit by hoping for industry and market conditions to improve."
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