'Unbundling' of airlines fees gaining speed in U.S.

AMR Corp.'s American Airlines is about to accelerate the trend of breaking the cost of a trip into an airfare plus many smaller fees.

Starting next year, American, which led a stampede by U.S. carriers to charge customers for checking even a single suitcase, plans to imitate the a la carte pricing structure pioneered by Air Canada, airline officials say. There are likely to be a few basic fare plans, and travelers can pick additional services -- for a fee.

Fans of "unbundling," as it's called, say it gives travelers lower base fares with the option of paying for extras that they really want, such as beverages and blankets.

Some travelers are wary, however, and suspect the airlines are just trying to chisel them a few bucks at a time.

Phone and cable companies have been using this pricing approach for years to offer extras including premium channels and pay-per-view events.

Now airlines see unbundling as a way to boost revenue and defray sky-high prices for jet fuel. In recent months they have added and enlarged charges for fuel, checked baggage, changing flights, upgrading from coach and other services.

There may be no going back to all-inclusive fares, even with the recent decline in fuel prices.

"We as an industry have opted to not just raise prices but to raise prices and change the fee structure," said Daniel Garton, American Airlines' executive vice president of marketing. Without fees to offset rising costs, "you're not going to be talking about fees -- you're going to be talking about lost service . . . being able to have a flight to San Diego."

UAL Corp.'s United Airlines expects to raise $700 million a year from fees. Northwest Airlines Corp. estimates baggage charges will bring in $150 million to $200 million a year. Continental Airlines Inc. predicts it will generate more than $100 million just from a new $15 fee for checking a single bag -- that doesn't include levies on additional bags.

Airlines have grown more sophisticated at wringing every last dollar out of a flight, partly by lowering and raising fares based on supply and demand. Much of this magic, called "yield management," is invisible to passengers, but it results in people in the same cabin paying wildly different amounts for the same flight.