American Airlines is making some stern adjustments that may add extra strain to its customer’s wallets. The airline has announced that it will require customers to cough up more money in baggage fees and will begin cracking down on a beloved loophole that customers like to take advantage of when booking travel.
American Airlines (AAL) revealed that customers booking domestic flights will now have to pay $35 for their first checked bags when purchasing online and $40 when paying for first checked bags at the airport. Previously, both fees were $30. For second checked bags, customers purchasing either online or at the airport will now have to pay $45. Before it was only $40.
Related: An airline just raised its baggage fees again
Also, for customers flying to Canada and booking other “short-haul international flights,” the new bag fees are $35 for first checked bags and $45 for second checked bags, regardless where it's purchased. The price hikes for baggage is a major move from American Airlines since the last time it raised its baggage fees was in 2018 when each was increased by $5.
On top of higher baggage fees, the airline also revealed that starting on May 1, customers will no longer be able to earn miles and loyalty points when booking tickets through travel agencies that are not “preferred” by the company. American Airlines claims that a list of “eligible preferred agencies” will be shared on its website in late April. Also, customers with Basic Economy fare tickets will only earn miles and loyalty points when “booked directly with American and eligible partner airlines.”
The crackdown on third-party travel agencies, which may offer lower costs on airline tickets, appears to be an effort by American Airlines to push customers to purchase tickets directly through the company's website.
The recent changes from American Airlines come after the company revealed in an earnings call last month that it faced headwinds in 2023 when it faced increased maintenance costs that are expected to rise again this year.
“I want to say our maintenance expense in 2023 versus 2022 was up something close to $0.5 billion,” said Devon May, chief financial officer of American Airlines, during the call. “This year flattens out a bit. We do expect it to be up.”
Maintenance costs have been eating away at the billion-dollar aviation industry in recent years. In 2022, expenses for maintenance, material and repairs increased by 35.6% for American Airlines compared to the previous year. For United Airlines, it increased by 20%, and for Delta, 34%.
Overall expenses for the airline industry this year are expected to grow to $914 billion, which is a 6.9% increase compared to 2023, according to estimates from the International Air Transport Association.
Many airlines appear to be responding to increased costs by issuing price hikes for some of their services. Shortly before American Airlines increased its baggage fees, Alaska Airlines also hiked its prices last month by charging customers an extra $5 for first and second checked bags. Also, in November last year, Southwest Airlines increased its prices for its onboard alcoholic beverages.
Related: Veteran fund manager picks favorite stocks for 2024
