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Deal of the Day by Kelli B. Grant (Author Archive)
Other Airlines Likely to Follow American's Lead
"This charge is not a nickel-and-dime move. It's survivability," says Terry Trippler, owner of TripplerTravel.com. The rising price of crude oil — which hit an all-time peak on Wednesday of $135 a barrel before retreating to just above $134 — has added $24.6 billion to airline fuel costs over the past year, according to the Air Transport Association.
American says its fuel costs have jumped by nearly $3 billion since January, and cites that as the prime factor in its decision to charge for the first checked bag and increase fees on everything from overweight baggage to making a reservation by phone. The carrier also says it will slash the number of domestic seats on its flights by 11% to 12% by October — nearly tripling its anticipated cutbacks for the year.
Other major carriers will "absolutely" follow American's lead — and quickly, says George Hobica, publisher of Airfare Watchdog, a fare-tracking site. "If American is going to do this, they're all going to do this," he says. In fact, he believes the rest of the major carriers will mirror American's moves within the month. United (UAUA) told the Associated Press it's seriously considering matching the fee. Delta (DAL) and US Airways (LCC), the AP reported, currently have no plans to follow suit, but said they will consider any options aimed at offsetting high oil prices.
Higher fees don't weigh on ticket sales as heavily as higher fares do, which is why airlines refrain from simply tacking on a fuel surcharge to the ticket price. Instead, airlines preserve lower airfares to lure in travelers, many of whom don't consider all of the added fees when they book the ticket, says Hobica. "That's how the airlines will be making money, until they get wise and get rid of these $29 and $49 fares," he says. "They more and more are becoming like razors or color printers: Gillette and HP (HPQ) give those things away to make money on the blades and ink."
More checked-baggage fees and reduced capacity could have devastating effects on travelers. "You can see problems coming a mile away," says Trippler. Here's what air travelers should expect:
Fewer seats
Over the past several years, carriers cut costs by offering fewer flights on large aircrafts and more frequent flights on smaller planes. The rationale: A half-full large flight wastes more money than two smaller ones running at full capacity. Now the airlines may switch back to larger but less-frequent flights in order to maximize the profit per passenger per mile flown, says Trippler. American, for example, said it would retire smaller regional jets as well as larger A300s and MD-80s. Should airlines opt for this strategy, it could be quite problematic for passengers. Fewer flights mean fewer fallback options in a system already struggling to rebook passengers in the event of overbooking or cancellation.Passengers aren't entitled to much compensation for cancelled flights, so it's important to be strategic when booking. (Keep in mind that if you buy tickets now, say, for a flight over Thanksgiving, it could be cancelled come fall, when American plans to make most of its cuts.) Since most cuts will occur at smaller, regional airports, travelers should book flights to and from large airports to limit the odds of cancellations and to make rescheduling easier, advises Trippler.
Higher fares
So far, airlines have refrained from raising fares outright, but as more passengers clamor for fewer seats they're bound to start climbing. "Decreased capacity is going to mean some combination of continuously increasing fares and fewer seats available at lower fares," says Ed Perkins, contributing editor for travel advice site SmarterTravel.com. Prices won't jump much until the capacity reductions are put in place. To avoid taking the hit, book flights as early as possible, especially for holiday travel when demand is high.Emphasis on loyalty
Loyalty has its privileges, especially when it comes to added airline fees. Many airlines give first-class passengers, elite frequent fliers and some full-fare coach travelers more wiggle room on paying second bag or overweight bag fees, says Hobica. American, for example, plans to exempt elite frequent fliers and passengers on some full-fare tickets or international flights from paying its $15 bag fee. To get similar fee exemptions, pick an airline, join its frequent-flier club and stick with it to generate the kind of repeat business that earns you some leeway.Carry-on craze
Overhead space is already at a premium, and a first-checked-bag fee will only make things worse. "I can see real arguments when people try to bring on a big suitcase," says Perkins. Expect airlines to be more vigilant about what makes it on board, as well as longer lines at security checkpoints to accommodate the wave of extra bags. To help make your flight go a little more smoothly, try to pack lightly, and make sure to arrive at least two hours before departure time — or even well before that at crowded airports like Chicago's O'Hare International Airport or New York City's John F. Kennedy International Airport.Also See:
Order ReprintsAs a frequent flier on American, I've noticed that when a flight is pretty full there's a good chance that right as the last passengers are boarding, they realize there's no room for their bags, the overheads are full. Now, it won't take much to tip things to be even worse. If even 10% of the fliers decide that the $15 for the checked bag is not worth it, the overheads will fill on a more regular basis. That last few minutes of scrambling will become even longer, and flights will be delayed as those bags need to leave the cabin to get loaded into the belly of the plane. When I first heard there was talk of charging for bags, I thought they would charge for the carry ons, not checked luggage. Too bad.
Joe
www.blog.joetaxpayer.com
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