American Airlines Baggage Fee

Thursday, May 22, 2008
There seems to be a lot of uproar about American Airlines starting to charge its passengers $15 for their first checked bags. They aren't the first airlines to charge for baggage, but they are the first to charge for the first checked bags. Others who have implemented similar policies normally only charge for the second bag.

This is in response to several factors, most notably of which is the rising cost of fuel. Just today, oil sped past $135 a barrel before coming back down to around $130. This is causing American Airlines, and others as well, to try and find new sources of revenue.

The thing is, I'm not sure why people are so upset. A few things make me understanding. First of all, I understand that companies can't run at a loss forever. Consumers seem to forget that companies are in business to make money. American Airlines is hemorrhaging cash. If they need to raise their prices to meet cost then that's what they have to do. This brings me to my second point. Consumers have a choice on whether or not to fly American Airlines. There are a dozen other carriers that don't charge this fee which you are free to take if you so choose. That's the beauty of capitalism. So long as consumers have choices, then it doesn't really matter what any one company does. If one company tries to charge higher prices than their competitors for the same product, consumers will eventually migrate to the other suppliers.

So let them charge whatever they want. Don't like it, buy a ticket somewhere else.