Check to Check

Posted on May 22, 2008

American Airlines wants to get closer to you. Well, to your checkbook at least. Starting in June, they will begin charging $15 to check a bag on your flight.

Many airlines already have a charge, often $25 or so, to check a second bag. Now you will be unable to carry anything for ‘free’ except your carry-ons and you can look for them to start limiting there as well, forcing some of that into the for fee department.

All of the fees for ‘extras’ like food, pillows, headphones, etc. which have all gone into the ‘it’ll cost you’ department are a part of what is known as ‘unbundling’. That hearkens back to the telecom companies who seem to have invented the concept. As times got tighter and profits diminished, instead of raising core prices, they would just remove something from the core service that you got for free, unbundling it, and then charging extra for it. So they could always claim their core services weren’t going up (they just included less).

Airlines are going down the same road, fueled by competition and skyrocketing oil prices, which are at $130 with no end in sight, it seems. They can’t raise prices because the market is so competitive and fliers have such instant access to price comparisons, they will lose customers quickly. So they have to take a circuitous route to accomplish the same thing…higher prices.