Corporate & Securities Law

American Airlines Announces New Pricing Scheme

At least, thats what the Onion (the go to source for antitrust humor, by the way) headline says:

American Airlines Now Charging Fees To Non-Passengers

December 1, 2008 | Issue 44?49

FORT WORTH, TX?Cash-strapped American Airlines announced a new series of fees this week that will apply to all customers not currently flying, scheduled to fly, or even thinking about flying aboard the commercial carrier.

American Airlines has promised never to raise its fees for not printing a boarding pass.

The fees, the latest introduced by American Airlines in a continuing effort to combat its financial woes, will take effect on Monday. According to company officials, these charges will include a $25 tax on citizens traveling with any other airline, as well as a mandatory $30 surcharge for passengers who decide to just stay home for the holidays instead.

“Tough times unfortunately mean tough measures,” American Airlines president Gerard Arpey said. “It’s never an easy decision to ask our loyal customers, as well as thousands of people chosen at random out of a telephone book, to pay a little extra, but that’s just the reality of today’s economic climate. We hope all Americans will understand this when receiving one of our new bills in the mail.”

Arpey said that non-passengers of American Airlines should expect to pay a small fee when making Greyhound bus reservations, choosing to drive to their final destination, or simply being a citizen of the United States with a valid Social Security number.

Arpey went on to note that some additional charges would also apply, including a $15 fee for every piece of luggage customers have inside their bedroom closet, and a one-time payment of $40 for any American whose name is Greg.

“We are confident that these new measures will not discourage customers from flying with American Airlines,” vice president Margaret Wilkinson said. “However, we’d like to remind our customers that there is a ‘discouraged-from-flying-with-American-Airlines’ charge if they do in fact choose not to fly with us.”

American Airlines, which posted a $1.45 billion loss in the second quarter of 2008 alone, claimed that the new fees?including the Taking A Shower Fee, the Knowing What An Airplane Looks Like Fee, and the Eating E.L. Fudge Cookies While Watching A Rerun Of House Fee?will help the company rebound. According to internal projections, the airline will recoup $500 million in the next three months alone, with nearly 80 percent of that revenue coming from citizens asleep at home.

“Watching television last night cost me $250,” said Baltimore resident Michael Peterson, one of many Americans now forced to pay high airline costs for folding their laundry and going to the ophthalmologist. “It’s ridiculous, but what can you do? I guess that’s just the price of not flying these days.”

“American Airlines charged me for cleaning out my attic,” said 74-year-old Samantha Pratt, a New Jersey resident who has not left the state since 2005. “Sure, I didn’t have to wait in any long lines, or go through invasive security searches, and I got to clean out my attic, which is something I’ve been wanting to do for weeks, but come on now.”

In response to American’s move, other airlines have begun offering more competitive rates. United this week unveiled a new $99 “spend the weekend quietly reading indoors” offer, while Southwest is introducing a $125 round-trip fare for those walking to their corner store for some groceries.

JetBlue, a commercial carrier known for its thrifty rates, has come out ahead of the pack, however, and is being lauded for its decision not to charge non-passengers not to fly.

Despite reduced offers such as these, many remain concerned over the new fees. Some have even expressed doubt about whether they’ll be able to afford to see family members they currently live with during Christmas.

“It’s just not worth it anymore,” said Caroline Huza, an Ohio native and mother of two. “Plus, every time I stay at home, I always get trapped next to some kid who won’t stop crying.

Full post as published by Truth on the Market on December 03, 2008 (boomark / email).