American Airlines announced this morning that they were cutting their flight capacity by as much as 12% and are instituting a new baggage handling fee.
American plans to retire as many as 85 planes in response to higher fuel prices and reducing demand. In addition, starting June 15, 2008, you will have to pay $15 for THE FIRST bag you check. If you need to check a 2nd bag, that will cost you an additional $25 and bags 3,4 and 5 will cost you $100 each. These changes are in addition to other, previously announced fees. The stock market responded by hammering AMR stock down by roughly 25% after the announcement.
The upshot for the average traveler will be longer lines at security since more people will have carry-on luggage than before, higher costs and a generally less pleasant traveling experience, not that traveling has been a whole lot of fun since 9/11 anyway!
My guess is that many travelers, particular those families with children, will choose to drive rather than fly for those short-hop flights of 2 hours or less. With having to get to the airport 2 hours early and the inevitable flight delays the “1 hour” flight to San Francisco from Los Angeles becomes a 4 hour ordeal and ultimately takes you almost as long as driving does. A note to the airlines … if you continue to raise prices, reduce service and further inconvenience travelers, this vicious cycle of price increases, reduced travel and lower profitability will continue until there are very few of you left.
Money Management For Modern Life 