American Airlines: Forget About Fees, These Are ‘Enhancements’

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Struggling American Airlines, which has been forced to enter bankruptcy protection and recently suffered high-profile black eyes such as seats coming loose on planes in mid-flight, is hoping that customers will like the idea of paying more fees upfront—so that they won’t have to pay these fees down the line.

Wait, did I use the word “fees”? The American Airlines website page explaining the changes makes pains to avoid using the “F” word much. The site takes the approach of highlighting “new enhancements” that result in “Booking Made Simple.”

Instead of just offering the usual roster of fees in piecemeal fashion—one fee for a checked bag, another for priority boarding, and so on—American has altered its fare structure. Now, there are three coach class tickets to choose from. With the most basic option, called Choice, customers (if they’re so inclined) pay for all extra services out of pocket, like we’ve grown accustomed to doing. By paying $68 extra, though, the traveler is upgraded to a Choice Essential ticket, which includes one checked bag and priority boarding at no additional charge, and also waives the usual fee if the passenger must change a flight.

(MORE: As Airline Fees Top $36 Billion, Is Relief in Sight?)

The third option, Choice Plus, runs $88 over the basic Choice ticket. For this sum, the passenger gets everything that’s included in the Choice Essential package, as well as a free drink on the flight, double miles on bookings, and the option of flying standby at no extra charge.

These new options might be thought of as upsells or “Super Size” tickets, which may be fine so long as travelers see themselves getting good value for the added cost. So are the pricier tickets worth the money?

One travel expert puts things in perspective when talking to the Associated Press:

“A checked bag costs $50 anyway, so for $18 more you get protection against change fees,” said George Hobica, co-founder of travel website airfarewatchdog.com. “If I had to check a bag anyway, I’d do it.”

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Thus far, however, travelers have shown a strong preference for the cheapest upfront fare, regardless of whether or not the purchase of such a ticket represents a degraded flying experience, or even if the result is paying more overall because so many fees are tacked on before one’s travel is completed. For proof, look at the high profitability of carriers like Spirit and Ryanair, which sell cheap flights and then charge exorbitantly high fees to make up for it, as compared to the struggles of Virgin America, which charges higher fares initially but gets raves for outstanding service and no-fee extras.

What’s particularly smart about American’s new ticket options is that the airline has managed to bundle two of the most hated fees together—checked luggage and change fees. The latter can now run a whopping $150 for flights within the U.S. Sure, passengers hate the idea of paying anything above the base cost of a flight, but they may hate the idea of having to pay for a checked bag and a change of flight even more. The fact that $68 can make these fees go away may be enough to get a decent portion of travelers to bite on the Choice Essential option. This is something of a two (loathed) birds with one ($68) stone deal for passengers. (Note, however, that while the change fee is waived with such a ticket, the traveler is still on the hook for paying the price difference between their original flight and the new booking. This difference can be huge, particularly if you’re trying to switch a flight at the last minute.)

While the way American is presenting these options is new, the concept of bundling fees to get more money out of passengers is one that’s been in the works for years. In 2010, for instance, American launched a “Boarding and Flexibility Package,” which included priority boarding and the ability to fly standby on a different flight on the same day of departure, for a total sum of $9 to $19 per flight.

(MORE: Why an Airline That Travelers Love Is Failing)

For years, Denver-based Frontier Airlines has had a similar pricing structure that also amounts to a bundled fee system. The carrier’s fare options allow passengers to pick the cheapest Basic flight, in which a checked bag costs at least $20 extra and seating assignments are only allowed at check-in (translation: you’re gonna get stuck in the middle seat), a much pricier Classic Plus far, which comes with two checked bags and a seating assignment with extra legroom, and a couple of other options in between.

Increasingly, airlines are giving travelers the option to pay for fees upfront—and the main selling point is that by doing so customers won’t have to pay for them later on. Sometimes fliers pay for these fees via higher flight prices. Other times, the fees are covered with the kinds of bundled packages offered by American. The usual way of paying for fees, a la carte, is still around too, of course. The concept of paying one lump fee and being done with fees throughout your trip is attractive to many airline passengers, as is the idea that due to the un-bundling of flights, travelers who rough it and fly without bags can avoid paying for services they don’t use. Somehow, though, none of this feels like any sort of upgrade or “enhancement.”

1 comments
WaltCudlip
WaltCudlip

These fares+ products have been around for a while now. Jetstar, Virgin Australia and Air New Zealand to name just three have been doing this for a while to market to various sub-segments of the economy-class passenger. What's arising now is the growing frustration by fellow passengers and inflight crews of the increasing number of cheapskates who won't pay to check their luggage and then cram everything in the overhead bins all for the sake of saving a few dollars. Unbundling fares has revealed some of the costs associated with the services but it has also cheapened the experience of travel.