American to charge for first checked bag

May 21, 2008 6:55:27 PM PDT
One major carrier is starting to charge you extra for checking even one bag, and, naturally, the others may follow.

American Airlines is trying to cover some of its costs by charging passengers for checked bags, It's also starting to reduce its flight schedule and it's not alone. The official airline guide says that there are nearly 23,000 fewer scheduled flights in the U.S. right now as compared to the same time last year.

Thanks to international travel, SFO is still doing very well on its passenger count. Despite skyrocketing fuel costs that have translated to rising fares for passengers, San Francisco International airport says its projecting a five percent increase in passengers this Memorial Day Weekend and for the remainder of the year.

"One advantage we have is the Asian market. It represents over 40 percent of our international traffic. We are a gateway to the Pacific cities. There's no doubt about that. The Asian market is the fastest growing market in aviation," says Mike McCarron of SFO.

Indian Airlines' Jet Airways is launching an SFO to Mumbai flight via Shanghai in June. It says the strength of the Indian and Chinese economies support the airline's growth. However, rising fuel prices are still a problem for the airline.

"It is a problem for everybody. Fuel prices are a problem for every airline in the world. We are not immune to that," says Manesh Dureja.

But they are faring far better than US carriers. Airline analysts from J.P. Morgan project losses of more than $7 billion this year, mostly due to skyrocketing fuel prices.

"We're back to the territory after 9/11, when bankruptcies are imminent if this thing continues," says Rick Seaney, CEO of FareCompare.com

American Airlines announced it will start charging $15 for the first checked bag. Other airlines could follow and air industry columnist and FareCompare.com CEO Rick Seaney says fares are already up and will continue to rise. And even then, airlines will still be in the red.

"I think it actually absolutely will not cover their operating costs. Gary Kelly CEO of Southwest Airlines a few weeks ago and said no airline could make money at $120 a barrel. So, right now it's at over $130," says Seaney.

It could get even worse if people stay home because it's too expensive to fly.

"I will be cutting back. Cutting back on driving, everything fuel related right now," says one traveler.

Seaney tells us that the Air Transportation Association shows pretty good bookings for summer travel, off only about one percent from last year. Come fall, when fares are already discounted, they probably won't be, and that's when we can expect to see passenger traffic to take a dive.

LINKS

http://www.farecompare.com


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