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Friday saw American Airlines
The gains made by United, American Airlines and Delta were enough to make airline stocks the markets biggest gainers last Friday. American Airlines stock increased by 4.15%. Delta stock closed up 2.55% up at $59.61. Southwest Airlines
These airlines stocks have been gaining since the worlds three largest carriers increased baggage fees.
American Airlines said that it would be increasing checked baggage fees on the first and second checked bag by $5 each. Tickets bought after last Friday would be impacted by the new fees. North American and Caribbean flights would be subject to these fees.
In short, first checked bags cost $30 and second checked bags will cost $40.
JetBlue and United Airlines increased their baggage fees, leading American Airlines to follow their decision. Delta followed the other airlines in their decision to increase baggage fees. The increase in fees come as fuel prices increase, which is causing tighter profit margins. Most airlines have restricted their fall flight timetable in order to increase fare prices.
Zacks have said that “U.S airlines reportedly make about a quarter of their revenue from fees”. With that in mind, it is clear to see why baggage fee increases are an essential part of airlines business model.