Yahoo Finance American Airlines (AAL) Increases Checked Bag Fees After 2018
American Airlines AAL announced a substantial increase in its checked bag fees, aiming to persuade passengers to purchase tickets directly from AAL if they want to earn frequent-flyer points. The carrier will raise fees for bags checked at the airport from $30 to $40 and for those checked online through its website from $30 to $35. Moreover, the fee for a second checked bag is increasing from $40 to $45, regardless of whether it's purchased online or at the airport. This marks the first fee hike since 2018. The hike is applicable for travel booked on or after Feb 20, 2024.
The airline's strategy encourages passengers to become AAdvantage status members. These members will continue to receive complimentary bags on American Airlines flights. Additionally, most customers with an AAdvantage credit card will enjoy the perk of a free first-checked bag on domestic itineraries. Similarly, premium cabin ticket holders on domestic or international flights can still get their bags checked for free. This strategy aims to drive customer loyalty and increase revenues from memberships and credit card partnerships.
Vasu Raja, American Airlines’ chief commercial officer, highlighted the benefits of booking directly with the airline, emphasizing a better experience, competitive fares and enhanced rewards for AAdvantage members. This suggests a push toward direct booking channels and customer retention through improved service offerings.
Furthermore, American Airlines is adjusting its bag fees for short international flights, including those to Canada, Mexico and the Caribbean. The first bag fee will now be $35, and the second bag fee will be $45, reflecting a $5 increase. This adjustment may affect American Airlines’ traffic to these destinations compared to its competitors.
American Airlines is not the sole U.S.-based carrier to hike checked bag fees this year. Alaska Air Group ALK and JetBlue Airways JBLU too have walked the path,indicating a trend in the industry toward increased ancillary revenue generation through bag fees. This suggests that while these fee increases may impact consumer perception and choice, they are also reflective of broader market dynamics.
Overall, American Airlines' decision to raise its checked bag fees is likely to have both short-term financial benefits and potential long-term implications in terms of customer loyalty and market positioning. Investors will closely monitor how these changes influence passenger behavior and the airline's financial performance in the coming quarters.
Zacks Rank
American Airlines carries a Zacks Rank #3 (Hold) currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
