American Airlines Just Raised Its Baggage Fee and Offered an Incredible, Maddening Explanation

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

You knew it was going to happen.

I knew it was going to happen.

American Airlines knew it was going to happen too. 

The only question was how many hours the populace would be waiting before American followed Delta and United Airlines (and JetBlue) in raising baggage fees to $30.

When the announcement was made, I sat and pondered the meaning of life for a while.

Then I did the only thing my Yoda could suggest. I contacted American to ask for its logic in making this unpopular move.

An American spokesman told me: 

Like fares, baggage fees are set by the supply and demand for the product in the marketplace, and today’s changes are in line with what other U.S. competitors are charging. 

I stared at this for quite some time, tried to absorb it thoroughly and only then did I consider its fine logic.

I fear some might observe that if baggage fees are set by supply and demand, does that mean that American will raise them for every flight that happens to have a lot of cargo in the hold? 

After all, there might be less space. Ergo, the price should go up.

Please consider arriving at the ticket counter, to be told:

Yeah, sorry, we’ve got a big shipment of golf equipment in the hold today. So your baggage fee will be $175.

And when baggage fees didn’t exist, did this mean there was simply far too much space in the hold, none of it was precious, so it could be just given away?

I fear what American might actually mean by supply and demand is that when four airlines hold more than 80 percent of all available seats, they have most of the supply.

They therefore have the power to set the price of anything to a considerable extent.

The only thing that might even hold them back even a little is the existence of a budget airline on a specific route or, in this case, Southwest’s insistence that its customers’ bags fly free.

There’s a little more logical consistency, I fear, in the second part of American’s statement: United and Delta have done it, so we will too. What did you expect?

Of course, it’ll be fascinating to see whether the more baggage fees go up, the more people try and haul all their belongings onto the plane, hence delaying departure.

That’s something airlines really don’t like.

The baggage fee hike is merely a fare hike by other means. It also comes with a lower tax rate for the airline, as fees are taxed differently from fares.

I wonder if, for even a nanosecond over a third cocktail, an American executive or two might have considered that not raising the baggage fee might have given the airline a little point of difference.

Ach, but what’s the point of difference when your only true distinction is your network and you can just keep on scooping up (what you think is) your fair share?

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