Airlines Slow to Get on Board With Bag Fees

CHARLOTTE, N.C. -- The move by AMR(AMR Quote - Cramer on AMR - Stock Picks) unit American Airlines to charge passengers $15 for their first checked bag has triggered an unusual split in the airline industry.

Typically, airlines act in concert when imposing new charges or higher ticket prices, fearing the competitive impact if one carrier charges more than another. But today, three legacy carriers and low-cost carrier Spirit Airlines impose a first-bag fee, while the three remaining legacy carriers and most low-fare carriers have not.

One reason for the split involves the question of whether the fee actually boosts revenue without adding cost. Aviation consultant Robert Mann says some airlines also worry the fee may trigger the unintended consequence of "turning flight attendants into baggage police" and causing delays as more passengers carry items on board and excess luggage must be moved from the cabin to baggage holds.

The fee can "change behavior, which is what typically happens in the airline business," says Mike Flores, president of the US Airways(LCC Quote - Cramer on LCC - Stock Picks) chapter of the Association of Flight Attendants. US Airways has also imposed a $15 first-bag charge.

"It may mean that passengers bring an even bigger rollerboard and a personal item onto the plane, and there will not be enough room, and policing it will take time," Flores says.

"US Airways thinks fewer people will book away if we charge a $15 fee for the first bag than if we raise our fare by $15," he adds.

No doubt American was concerned as its June 15 implementation date approached and few competitors followed suit. American announced the charge May 21, triggering howls of protest from consumers. Initially, the only response was by Southwest(LUV Quote - Cramer on LUV - Stock Picks), which quickly pledged not to impose a similar fee.