Thursday, May 22, 2008

Guest Blog - Anti-American Airlines

Today, I turn over Platinum Elite to Ryan (he's blogless, otherwise I would link to his). Ryan has much to say about American Airlines' most recent checked-bag fees...

The start of this guest blog on Platinum Elite began as a rant about how ridiculous American Airlines is to actually charge $15 to check a customers’ FIRST bag (both ways by the way. For the details click here.

After doing some research my anger towards AA turned more into confusion.

According to their 2007 Annual Report, the AMR Corporation (the company that owns American Airlines) reported a Net Profit of $504 million. This was an increase of $273 million from their prior year’s profits. Yet despite what most companies would consider a stellar year, I thought American Airlines actually has the audacity to charge a customer $30 (again, $15 both ways) to check a bag. Just a side note, the only reason I would check a bag is because airlines insist on making their overhead compartment just large enough to fit a third graders’ backpack. Note to self, write a letter to each airline about their inadequate size (of overhead storage that is).

So, as I progressed through my research of how idiotic, greedy, and purely evil American Airlines actually was, I found myself in somewhat of a predicament. The further I dug, the more I found that American Airlines really isn’t that evil. For example, AA reported a 2008 first quarter net loss of $328 million (or approximately 65% of their entire profits from the previous year). So, being the accountant that I am, my first instinct was to look at their most recent financials and Proxy Statement. I kind of enjoy reading these as they give a detailed account of executive compensation (something that I find to be completely over-inflated today). After review of their overall compensation package, along with checking the compensation packages of some other airlines, I found that while I can’t appreciate the figures, I can certainly see how they can justify them.

The problem isn’t compensation, and additional review of their financials didn’t reveal anything out of the ordinary. I began to think that maybe AA’s latest maneuver actually is in response to higher oil prices. As an investor, I would expect this response from AA’s management. However, I am also a consumer and this new baggage policy (while it really isn’t going to brake the bank) irritates me to no end. Why are we as consumers the ones who have to bear the brunt of increased oil prices? Ticket prices have increased steadily, and now I have to pay to check a bag. Are you kidding me? Ridiculous!!!

After getting fired up at American Airlines for another time, I calmed down and asked myself two things. The first was, “Who am I supposed to be mad at?” Is it the oil companies, OPEC, the President, Congress?? The other question was, “Once I do find out who’s to blame, what can I do about it?” After hours of reflection I still have no idea. Is it easy to angry at AA? Of course, they’re charging me an extra $30 to check a bag. Will it do any good to be angry with them? No, especially when I other airlines will follow suit. I can’t fight all of them!

So, it’s back to square one for now. I wonder if I ever do find the answers to my questions if it will make me feel better about paying $30 dollars to check my bag when flying American. I guess if I don’t, I can always stuff my week’s worth of clothes into my backpack and pretend like nothing has changed.

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