American Airlines' Pricing Blunders

It has not been a good week for American Airlines. First, the company drew the ire of air travelers by announcing it would charge $15 per checked bag beginning June 15. Then, American had to backpedal on a decision to charge $2 per bag checked by skycaps at Boston's Logan International Airport and ban skycaps from accepting tips.

These recent moves by American Airlines are bewildering. It is no secret airlines have struggled since 9/11, and the effects of rising oil prices hit particularly hard in the airline industry. But, the company's decision to use bag checking to create a revenue stream is a huge mistake. Travelers understand that the costs to use air transportation have risen. It would be much more palatable to build costs into prices of tickets. Add-on charges for baggage handling on top of higher fares just will not sit well with customers! Also, American is taking a risk that other airlines will follow suit with similar charges. If not, American may be forced to back off the fees. Unfortunately, the damage to customer goodwill will have occurred already.

Link: Baltimore Business Journal - "American Airlines to Halt Curb