Arthur's Blog: Looking Under the Hood at American Airlines' New Pricing Method

The most significant recent news in travel was the announcement last week by American Airlines of a new, three-part method of quoting airfares. It is an innovation that will undoubtedly be copied by other airlines, and though difficult to grasp, it makes a lot of sense.

Under American Airlines' new plan, you will have three choices when you book an airfare on that carrier: Choice, Choice Essential, and Choice Plus.

First, you can simply opt to buy Choice: a basic air ticket with nothing other than simple air transportation included, to which you will add the various fees that you alone can choose to incur. You add the cost of checking your suitcase ($25 per bag, each way), and the cost of later changing your reservation if that’s what you want to do ($150 if you later change the date or time of your flight).

Or you choose Choice Essential by adding a total charge of $68 to the basic cost of your air ticket. For that additional $68, you receive the right to check one suitcase round-trip ($25 each way, or a value of $50 round-trip), and you also receive the right to change the date or time of your reservation without penalty. You also receive priority boarding privileges. In effect, you have paid $18 over the cost of checking your suitcase round-trip, a sort of insurance policy, that enables you -- if you later wish -- to change the date or time of your flight. For a lot of passengers, this additional cost of $18 makes a lot of sense, giving them the unlimited right to change the date or time of their flight without penalty. (And American Airlines is betting that so many people will take out that $18 "insurance policy" as to earn a lot of money for the airlines, far exceeding the occasional $150 that they nornally earn for permitting people to change their mind about that date or time.

And there's a third option, Choice Plus, costing $88 for one suitcase round-trip, flight changes without penalty, priority boarding, stand-by privileges, a 50% increase in the frequent flyer privileges you receive from the trip, and one alcoholic drink.

There's also a catch: You can purchase these $68 and $88 plans only directly from the airline, and not by booking through an online travel agency like Expedia, Orbitz or Travelocity. In effect, American wants you to enjoy these privileges only when you save them the hefty commission they normally have to pay to an online travel agency.

So how about it? Do these "advantages" seem worth the extra outlay? I'd be happy to hear comments.