I don't think AA is that interested in those pax who fly just a few times a year. AA is more in the business of pax who fly alot, fly international, and most of all, purchase premium cabin tickets. If you take a look at AA's bag policy, it's not that bad. Any level of elite status (not that hard to achieve) gets you out of paying those fees. If you're flying first or business class (doesn't matter how you got there), your bags fly free. Going international (for the most part), your bags fly free. Paid for a full fare coach ticket, your bags fly free. travel with someone who has elite status, your bags fly free. It's pretty easy to get out of paying bag fees and ever since attaining status, I haven't found the need to check a bag anyways, it's a big pain in the neck and it's more stuff to carry and having to worry about the stuff getting stolen/lost. AA will let you check bags for free when you can demonstrate that you don't need to check bags (many elites have learned to pack really really light!)

and for those pax who fly on $99 tickets and check 100lbs of bags, is it even worth it for AA to fly them? It could be possible that AA would actually incure a net loss flying those pax. Sure $130m might be lost revenue but the saved costs might easily exceed $130m.