AA crisis PR! Raising baggage fees

by Karen Cummings on August 11, 2009

Weber Shandwick, one of the world’s leading global public relations firms, is up for an award for Crisis Management for their effort on behalf of American Airlines in the PR News Platinum PR Awards. These awards honor “the most innovative and successful public relations campaigns of the past year,” according to a recent email I received announcing the finalists.

Weber Shandwick entered their efforts for “First Bag Fee: American Airlines Takes Action to Combat Unprecedented Rise in Fuel Costs” in the category that is described as such: Communications surrounding any crisis, from product recalls to executive malfeasance to terrorist attacks are eligible in this category.

Instituting a baggage fee requires crisis management? The other entrants dealt with:

* The Hijacking of the Biscaglia: Communicating with Families During a Hostage Crisis
* Saving American Manufacturing
* January 2008 Storm Response (by Pacific Gas and Electric Company )
* Vectren Energy Delivery’s Response to Major Winter Storms

While I don’t have the opportunity to look at the entry, nor have I found the original press releases, I’m wondering whether the crisis was the actual instituting of the baggage fee (and is that a crisis for American Airlines or its passengers?) or the “unprecedented rise in fuel costs.”

By looking through the news coverage from that time last year, American Airlines completely touts the cost of fuel as the main reason that they have added this fee (at that time $15 for the first bag, coming just two weeks after putting a $25 fee on the second bag).

Peter Pae of the Los Angeles Times reported May 22, 2008:

With oil prices hitting new records almost daily, the nation’s largest air carrier, American Airlines, announced drastic steps Wednesday to “remain viable,” including charging new fees for all checked baggage, slashing domestic flights and laying off thousands of workers.

It was one of the most extreme moves yet by a U.S. airline, and came as the price of oil jumped Wednesday to $133.17 a barrel, up $4.19.

Good spin if I do say so myself. What’s a poor airline to do when fuel costs are putting them out of business, not to mention all the other expenses of running an airline? As USA Today travel columnist David Grossman was quoted in this article on gothamist.com:

A Boeing 767 flying one way from New York to Los Angeles consumes approximately 9,000 gallons of jet fuel. If 150 passengers are aboard, that equates to 60 gallons of jet fuel per passenger. At the current price of $4 per gallon of jet fuel, the fuel cost of that one-way flight is $240, or $480 round trip per passenger. But that’s just the fuel cost and does not include the cost of owning and maintaining the airplane, plus all the computer systems, facilities and employees necessary to make the journey possible.

But wait, what are they doing now that jet fuel is $1.85/gallon or $77.4/barrel, less than half what it was last year? Have they rolled back the charges? Are we all dancing in the streets?

Hmmm, not exactly. In fact, American Airlines’ fees that were supposedly instituted just because of the high cost of fuel are about to rise on Aug. 14 from $15 to $20 for the first bag and from $25 to $30 for the second bag. So what is the crisis this time? Weber Shandwick, we need you!

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Tagged as: AA, American Airlines, baggage charges, crisis, PR, public relations

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  • Frank

    But wait, what are they doing now that jet fuel is $1.85/gallon or $77.4/barrel, less than half what it was last year? Have they rolled back the charges? Are we all dancing in the streets?
    ==========================================================

    TAKE OFF YOUR BLINDERS.

    The fuel costs among the nine largest U.S. airlines dropped $4.93 billion in the second quarter compared to a year earlier: $6.09 billion in Q2 2009 compared to $11.01 billion in Q2 2008. That’s a 45 percent decline.

    So you may ask, how could airlines lose money when their fuel expenses are down so much?

    The answer is that operating revenues fell even more, down $6.73 billion in Q2 2009 versus Q2 2008: $26.56 billion compares to $33.29 billion.

    That’s equivalent to the combined revenues in Q2 of Southwest Airlines, Alaska Air Group, AirTran Holdings and JetBlue Airways, plus another $1.86 billion.

    Or, if you would, the drop in revenue is almost as much as the $7 billion in quarterly revenues for Delta Air Lines, the world’s largest airline. It’s more than AMR’s $4.89 billion. It’s more than UAL’s $4.02 billion.

    Among the nine biggest carriers, only AirTran and JetBlue saw their fuel expenses decline more than their revenues.

  • http://leftcoastsportsbabe.com Janice Hough

    As the airlines get into the paid baggage service how long until they follow Fed Exp, UPS, etc, and have to refund your money when your baggage doesn’t arrive on time.

  • Dave

    The fuel surcharge, in my opinion, never was intended to relate actually to the cost of fuel. It is a way to keep advertising a phony base price, but actually raise fares. An advertised base fare should be required to include all costs that the customer cannot avoid, except for government and airport fees and taxes that are not imposed by the airline.

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  • Frank

    Dave August 11, 2009 at 11:53 am
    The fuel surcharge, in my opinion, never was intended to relate actually to the cost of fuel. It is a way to keep advertising a phony base price, but actually raise fares. An advertised base fare should be required to include all costs that the customer cannot avoid, except for government and airport fees and taxes that are not imposed by the airline.
    ==================================================================

    Interesting how people see things differently. Being in the industry, I see that they needed to increase revenue, but try to keep the airfares down. Hence, they price their product like the phone company, the cable industry, etc. You pay for, what you use. You want HBO, Starz or five channels of Showtime, you PAY for it. You want caller ID, Call waiting, long Distance service, you PAY for it.
    You want a fare to Florida for 89.00, you got it. But, if you want additional services, you PAY for it. Want a watch a movie, have something to eat? Have a premium seat, check your bags? You PAY for it. WANT NONE OF THE SERVICES? That’s your decision as well. That keeps YOUR airfare down.
    Interesting, how the consumer views the airline industry. One to two decades ago, everyone complained because they knew it would produce compensation. Flight’s late, I want compensation. Didnt like the inflight meal, I want compensation. Weather canceled the flight, I want a hotel room. I want a phone voucher. I want a meal voucher.
    I’ve watched hundreds of airlines go out of business through the years. Employees lose pay, pensions and retirement benefits. And half the industry went bankrupt a few years ago, so YOU, the traveling public can fly cheaply. So, next time you’re at the check in counter, paying for your checked bag. Consider the alternative. All those road TOLLS. Gas charges, food for the road, wear and tear on your car and the TIME spent getting to your destination. Planes are full for a reason, it’s still a good value.

  • Karen Cummings

    But, if you want additional services, you PAY for it. Want a watch a movie, have something to eat? Have a premium seat, check your bags? You PAY for it. WANT NONE OF THE SERVICES? That’s your decision as well. That keeps YOUR airfare down.
    ============
    The point of the story is that American Airlines didn’t say the above — they used a PR firm to put out the “spin” that they were only raising the prices because of the high fuel costs. And their PR firm did such a good job — in fact, most of the coverage of American Airlines instituting the first checked bag fee indicated they were only doing it because of the high cost of fuel — that they are now up for an award. My point was that now maybe they have to tell the truth — we just need more money to operate so we’re going to charge for whatever we can, such as the list you have above. That’s not quite as good spin, though.

  • Frank

    Karen Cummings August 12, 2009 at 10:09 am
    The point of the story is that American Airlines didn’t say the above — they used a PR firm to put out the “spin” that they were only raising the prices because of the high fuel costs. And their PR firm did such a good job — in fact, most of the coverage of American Airlines instituting the first checked bag fee indicated they were only doing it because of the high cost of fuel
    ===================================================================

    Just a few years ago, the airline industry enjoyed fuel costs of $30/barrel. They based their business model around those expenses. Last year, it hovered over $145 dollars. Today’s rate is $70. For every PENNY increase, that increases the fuel costs of the airline by MILLIONS. This airline LOST 4 MILLION dollars a day in the second quarter, traditionally one of the airline’s best quarters. BECAUSE THE INDUSTRY HAS CHANGED IT’S WAY OF DOING BUSINESS CAN BE ATTRIBUTED TO ONE OF IT’S BIGGEST EXPENSES: FUEL.
    (I cap my comments to emphasize my remarks, not yell)
    Most airlines adapt to external changes in the industry. That keeps them competitive. It’s adapt or disappear.

  • http://www.tripso.com/author/leocha Charlie Leocha

    FYI: American Airlines got a honorable mention for their “crisis communication” around their first bag fee.

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