Carrier will also slash domestic schedules

In a dramatic display of just how bad things are getting for the airline industry, American Airlines has announced plans for substantial reductions in its domestic flight schedules later this year, and also said it will start charging a fee for every checked bag. The airline’s CEO, Gerard Arpey, told parent company AMR Corp.’s annual shareholders meeting that American has tossed out its earlier plan to reduce domestic mainline capacity by 4.6 percent in the fourth quarter; instead, American now plans to cut domestic capacity by 11 to 12 percent. The airline’s regional affiliate capacity will now be cut by 10-11 percent in the fourth quarter instead of the previously announced 2 percent, Arpey said. The changes mean that American will ground 40 to 45 mainline planes—mostly MD-80s, but also some A300s -- as well as 35-40 regional jets and a number of turboprops, taking hundreds of flights out of its schedule.

American also announced it will charge a $15 fee for a passenger’s first checked bag, effective for tickets purchased on or after June 15. The airline recently matched other major carriers in assessing a $25 fee for a passenger’s second checked bag. The new fee, like the second bag fee, will not apply to AAdvantage elite members; persons flying on full-fare economy, business or first class tickets; or international travelers, except those flying to or from to Canada and U.S. territories. American also said that it has “increased its fees for certain other services, ranging from reservation service fees to pet and oversized bag fees. The increases mostly range from $5 to $50 per service,” a spokesman said.

“The airline industry as it is constituted today was not built to withstand oil prices at $125 a barrel,” Arpey said, “and certainly not when record fuel prices are coupled with a weak U.S. economy. Our company and industry simply cannot afford to sit by hoping for industry and market conditions to improve.” When it comes to increasing revenues, new passenger fees are the industry’s only alternative to raising fares – something the airlines have already done14 times since mid-April, American noted. At this writing, no other carriers had yet matched American’s new first-bag fee, although rival Southwest Airlines did issue a statement noting that it ”still allows you to check up to two free bags when you travel with us, and has no plans to change that.” And Frontier Airlines on Friday (May 23) announced that it will join major airlines in imposing a $25 fee for a passengers’ second checked bag, effective for tickets purchased June 10 or later.