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May 21, 2008

American to charge checked bags

Slammed by soaring oil prices, the biggest US airline is cutting domestic capacity, cutting staff -- and increasing fees for everything from reservations services to pet travel.

American Airlines announced this morning that, as of next month, most passengers will have to pony up $15 for their first checked bag.American Airlines said the move, a potential game-changer for the industry, is part of an effort to deal with the skyrocketing price of oil.Crude closed at a new high of $133.17 a barrel in New York, up 3.3% from Tuesday, and traders pushed it to $134 a barrel in after-hours trading. Crude is up 38% this year and more than 200% since the end of 2004.crude's gains and signal from the Federal Reserve that it is done cutting interest rates combined to batter stocks. The Dow Jones Industrial Average finished down 227 points, or 1.8%, to 12,601. The Dow has lost 427 points in the last two days, its worst two-day loss since Feb. 28-29.S.American also said that it will cut U.S capacity -- the number of available seats per miles flown -- by 11% to 12% in its fourth quarter compared with the same time period last year. That's far more than the 4.6% reduction American had forecast just one month ago.

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