Of all the actions taken by the airlines to defend against high fuel costs, none has brought the gravity of the fuel crisis home to consumers quite like American Airlines' plan to charge most coach passengers $15 each way for the first checked bag.
The high fuel costs are "the biggest threat to the world's airlines ever," Henry Harteveldt, vice president and principal analyst at Forrester Research, said. Even in the dark days following 9/11, "we knew demand would return." But there is no certainty that the soaring price of oil, now more than $130 per barrel, will come down. "We have to accept the fact that air transportation is probably going back to being something for higher-income people," Harteveldt said. "It's the end of an era."
American will assess the fee for domestic tickets purchased on or after June 15. Passengers who buy full-fare coach, business or first class tickets, elite members of the AAdvantage program and those traveling on an international itinerary (except Canada, Puerto Rico and the U.S. Virgin Islands) will be exempt.
American also said it will cut domestic capacity by 11% to 12% in the fourth quarter. It will retire 40 to 45 mainline aircraft, primarily MD-80s along with some A300s, 35 to 40 regional jets and a number of turboprop aircraft. American said the reduced capacity will result in workforce reductions at both American Airlines and American Eagle and acknowledged that the eliminated jobs could number in the thousands.
In addition to the checked-bag fee, American raised nearly every other fee it charges (see box). Those changes went into effect May 21. The exception was the fee for a second checked bag, which American left unchanged at $25. But it was the news of the first-bag fee that shocked the traveling public and the industry's assorted observers in a way that the 12 successful attempts at raising air fares and fuel surcharges since the beginning of the year have not.
The move would have been unthinkable even in the aftermath of 9/11 for an airline that vaunts its status as a full-service carrier.
"Let's be rational," Harteveldt said. "People who are going away need to bring things. For a traditional airline like American to charge you for a basic essential -- that dog don't hunt."
Forrester's research shows that 55% of leisure travelers set a budget for their trips. For a family of four spending a week at, say, Disney World, baggage fees could easily run to triple digits.
Harteveldt said he sympathized with the difficulties that American and other carriers face, adding that he respected American's decision to cut capacity. But he predicted that the fee for the first checked bag would create a "new circle of hell" at airports. "People are going to try to carry on steamer trunks," he said.
More passengers are likely to try and sneak liquids in containers larger than three ounces into their carry-ons, creating snarls in security lines, and the battle for already scarce overhead bin space will escalate. It's likely that some flights will be delayed as cabin crew divert some carry-ons to the baggage hold when bin space runs out. "We're looking at absolute mayhem," Harteveldt said, particularly since the change comes at the beginning of the summer season.
Many participants in online forums agreed, saying they would rather pay a higher fare than deal with the repercussions of the checked-bag fee. Neither GDSs nor American's Web site is set up to accept the baggage fee transaction, so passengers will have to pay at a kiosk or at curbside check-in, slowing those lines as well. An American spokesman said online payment may be enabled at some point.
Harteveldt said six years after 9/11 spurred a new evolution in the airline industry, the GDS companies should have been better prepared to accommodate airlines' additional fees. The "a la carte" pricing model is only going to spread, and "this goes beyond fare families," he said.
Harteveldt said Air Canada, which is "ahead of the game" when it comes to the a la carte model, has taken the right approach toward the baggage issue, knocking a few dollars off the fare when customers agree not to check bags.
American has "opted for the stick rather than the carrot, and this is a steel rod," he said.
The American spokesman said the issue of whether to refund the fee for delayed or misplaced bags is still under discussion. So far, no carrier reimburses passengers for the second-bag fee adopted by major carriers several weeks ago.
Several carriers are mulling whether to adopt the first-bag fee, but Southwest is not among them. It said it has no plans to change its policy of allowing each passenger two free checked bags. Meanwhile, US Airways said it will no longer distribute free snacks on board, effective June 1, and Frontier unveiled a new menu of fee increases.
Ray Neidl, an analyst with Cal¬yon Securities, wrote that the industry needs either "major capacity shrinkage that will enable large ticket-price increases" or a substantial decline in oil prices, at least down to $100 per barrel, just to return to break-even levels.