AMR Finds New Way to Nickel and Dime You


American Airlines (AMR) has become about as low-rent as one could imagine. I can stomach paying to check bags and for snacks. To me, it makes sense, as they provide important revenue streams and strike me as products and services for which it's possible to charge with little disruption to the passenger experience.

But, as of May 1, 2010, the airline will be charging $8 for a blanket and inflatable neck pillow on flights lasting more than two hours – including flights to Hawaii, Canada, Mexico, the Caribbean and Central America. But, for your trouble, American will toss in a $10 coupon towards a purchase of more than $30 from Bed Bath & Beyond (BBBY).

Of course, on flights lasting less than two hours, American's policy is BYO. If you want to stay warm, cram your own blanket into your carry-on.

According to Henry Harteveldt, travel industry analyst at Forrester Research, this isn't an unreasonable move. He tells USA Today, "It gives the passenger some control. If they want a blanket they can pay extra for it; if not, they didn't pay for it as part of their fare."

Harteveldt seems to overlook the fact that the passenger is still in control when blankets are free: if you want one, ask for it and get it. You don't need an exchange of currency to provide a service to a passenger.

The reason for the fee on blankets and pillows is obvious: American needs the money. Last year, American's parent company, AMR, raked in $2.9 billion – 11.5% of its revenue – from "ancillary sources," such as extra bag fees, up from $2.2 billion in 2008. Since passengers really don't want to pay for fares, the airline needs to make up the difference somewhere else, and that includes blankets. This becomes even clearer when you take a look at the change in top line from 2008 to 2009: Revenue fell from $23.8 billion to $19.9 billion ... that's a lot of ground to make up.

Says Harteveldt: "Other than the basic seat, the only thing you can count on to come with your fare is an oxygen mask and a seat belt."

Ultimately, we're seeing the essential tension between airlines' needs for revenue and passengers' insatiable desire for cheaper and cheaper flights. Increasingly, air travel is becoming an a la carte affair. Fortunately, perception doesn't matter: the airlines failed in that regard long ago.
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Last updated: February 10, 2012: 06:34 AM

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