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American to kick off next game-changing fee evolution in H2 2016

American Airlines has sounded the bugle of heralding the next game-changing fee evolution phase later this year. Media reports quoted Scott Kirby, President of American Airlines Group, as saying that the company is ready to introduce new basic fare structure in Economy Class and Premium Economy in the second half on 2016 and thus usher in yet another game-changing fee evolution in the aviation industry. The details are yet to be made public.

The reports said that American Airlines had earlier in 2008 introduced a $15 fee for a first-checked bag, which was a completely new concept for a legacy carrier. However, LCCs like Ryanair had already been charging various fees for several years now. According to reports, Ryanair has also been dubbed as “the Godfather of ancillary revenue”. It may be recalled that the introduction of various types of fees such as for preferred seats, early boarding and checked bags have already brought drastic changes in the global aviation industry in a big way.

Studies were also conducted to assess the changes brought by the introduction of ancillary fees and forecast was made as well. A study conducted in November 2015 revealed that international airlines would be generating $59.2 billion in fees in the year 2015, a significant increase of 1.8 percent as compared to 2014. The study also said that of the projected $59.2 billion amount, $36.7 billion revenue alone would be generated from a la carte services like meals, Wi-Fi, preferred seats and checked bags.

Meanwhile, Scott Kirby while presenting the group’s fourth quarter earnings report recently, said that he was “really excited” about the game-changing new fares and said that these would be impacting “at least as significant” as the earlier changes brought by American Airlines in its ancillary revenue strategy way back in 2008.

Kirby said, “Those initiatives are indeed significant for American Airlines Group and there’s a need to move forward on this. It is expected that the new fares would be rolled out later this year and it would be only in 2017 that a meaningful impact on the revenues would be visible.”

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