American Airlines Adjusts Fees and Mileage Earnings in Revenue Boost Effort

📝 SUMMARY: In a strategic move to boost revenue amidst a backdrop of falling airfare prices and escalating operational costs, American Airlines ($AAL) has announced an increase in checked baggage fees, marking its first adjustment in this area since September 2018. Effective immediately, passengers will be charged $35 for the first checked bag on domestic flights when booked online, up from $30, with the price rising to $40 for airport purchases. The fee for a second checked bag has also been elevated to $45, aligning with the carrier's efforts to manage the significant expenses associated with baggage transport, including fuel costs.

Simultaneously, American Airlines has initiated a revision of its frequent flyer program, specifically targeting travel agency bookings. Starting April, only tickets purchased through certain preferred travel agencies will be eligible to accrue AAdvantage frequent flyer miles, directing customers towards American's own booking platforms. This change particularly affects basic economy ticket purchasers, who will now only earn miles through direct bookings on the airline's website.

The airline justifies these adjustments as necessary measures to return to profitability and manage increased costs, especially in the transportation of bags. This strategy mirrors actions taken by other airlines, such as Alaska Airlines ($ALK) and JetBlue Airways ($JBLU), which have similarly increased their baggage fees recently.

American Airlines' policy adjustments come at a time when the airline industry is grappling with the challenge of covering higher costs, including those stemming from new labor contracts, without compromising on pricing power. In the first nine months of 2023, U.S. airlines generated $5.5 billion from baggage fees, a testament to the growing reliance on ancillary revenues in the face of fluctuating airfares and operational expenses.

🔍 SOURCE: https://www.cnbc.com/2024/02/20/american-airlines-raises-bag-fees-limits-miles-for-travel-agency-bookings.html