American Airlines (AAL) has become the latest U.S. carrier to raise fees on travelers as it struggles with soaring jet fuel costs.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
The largest U.S. airline joins other carriers in raising its baggage fees, but the cost to check luggage will be even more expensive for customers who buy basic economy tickets. This is because American Airlines is raising the cost more for its no-frills option, while the other airlines had across-the-board increases.
Going forward, American Airlines is hiking its baggage fee by $10 to check a first piece of luggage at the airport on domestic and short-haul international flights. That brings the price for one bag to $50. A second bag will cost $60 for most tickets.
Rising Jet Fuel Costs
American Airlines joins other carriers United Airlines (UAL) and Delta Air Lines (DAL) in raising fees to help offset a jump in jet fuel costs as the war in Iran pushes crude oil price above $100 a barrel. Management at airlines have warned that higher jet fuel costs will lead to increased fees for travelers.
In addition to the increased baggage fees, American Airlines’ customers in basic economy will each have to pay to pick a seat starting on May 18, and they will not be eligible for complimentary and system-wide upgrades. Jet fuel is the second-biggest cost for airlines after labor.
Is AAL Stock a Buy?
American Airlines’ stock has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on six Buy, eight Hold, and one Sell recommendations issued in the last three months. The average AAL price target of $15.37 implies 34.88% upside from current levels.
