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(c) Elliott Publishing.

Blindsided By American's Fees
ChrisCrossings · July 12, 2002

Q: I recently bought a ticket on American Airlines' Web site using my frequent flier miles. After I approved the purchase, I noticed a $50 "expedite fee" that showed up in the fine print.

I thought there must be a mistake. I called the airline and a representative explained that the $50 fee was incurred because I was booking less than 21 days before my flight.

"What's to expedite?" I asked. "It's an electronic ticket."

After some back and forth, the agent agreed to cancel the reservation, re-credit my miles, and void the credit card transaction. I then booked my award travel on United Airlines, which doesn't charge an expedite fee.

Why does American charge an expedite fee? And why it doesn't tell me about it before I book a ticket?

-- Brad Power

A: American Airlines admits that it could improve its fee disclosure, and it's in the process of revising the award expedite fee information on its Web site. "The change fees are stated on AA.com and in printed membership literature," spokesman Tim Kincaid told me. "Since it was never our intention to keep these fees hidden, we have taken steps to make fee amounts more prominent when members book and claim their awards online. Members can expect to see these changes within a few weeks."

Kincaid defended American's practice of imposing the fees. He notes that earning and using miles can be accomplished without paying any service fees. "But we routinely charge members for specialized services, such as award reinstatement, mileage transfers following a divorce or award issuance in less than 21 days," he adds.

Why? American says there's a cost to perform many of these additional activities, as well as the cost associated with developing the technology for electronic tickets and other enhancements. The airline considers the fees to be reasonable. Think of your charges as paying a rush fee for expedited services, like a passport.

But American is basically admitting is that it's subsidizing research and development with this money, and that in some cases these charges aren't actually covering the cost of the services provided. I believe that's a business decision that the airline must make. If customers are willing to pay the extra fees then they will; if not, they'll go to a competitor, as you did.

I can't fault an airline for trying to make money in an industry in which success isn't measure by how much you make, but how little you lose. I applaud the carrier for improving its disclosure, but I'm inclined to let American Airlines' live with the consequences of its fee policy.

Christopher Elliott's column appears on weekly on Ticked.com. All e-mailed questions to ChrisCrossings become property of Ticked.com and may be edited, condensed or republished at the site's discretion. You may reach Elliott at chris@ticked.com. Or visit his home page at http://www.elliott.org.