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Continental Plans Fee for First Checked Bag

Continental (CAL) will join an unpopular club among members of the flying public, saying it will become the newest airline to charge passengers for the first bag they check.

Continental's $15 first-bag fee will take effect for travel on or after Oct. 7. It will apply primarily to passengers paying economy fares. Many others, including first class, international and military passengers and premier frequent-flier club members, are excluded.

Before Continental, AMR (AMR), Northwest (NWA), UAL (UAUA) and US Airways (LCC), rolled out first-bag fees.

Still, there have been holdouts. Southwest (LUV - Get Report), which carries the most U.S. passengers, doesn't have a first bag fee. Neither does Delta (DAL - Get Report), which is poised to become the world's largest airline, if regulators approve its planned acquisition of Northwest.

"Our customers can continue to check a first bag for free," says Delta spokeswoman Betsy Talton.

On a July earnings conference call, CEO Larry Kellner was asked whether Continental would impose a first-bag charge.

"We watch customer reaction," he responded. In particular, he said, the carrier wants to see if travelers "don't distinguish between carriers charging and not charging," or if they book away from carriers who charge the fee.

If the former is true, "we can't afford a $30 fare differential," Kellner said, speaking of the round-trip implication of a $15 fee. "Economically, that will put a lot of pressure on us."

In general, carriers are anticipating hundreds of millions of dollars annually from new fees added in the wake of the oil price run-up. With the exception of United, which this week said it would back away from a plan to test buy-on-board meals for economy passengers on some trans-Atlantic flights, none have publicly identified any areas of passenger resistance.

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