Originally Posted by
Sagy
There is no maybe about it. AA made over $220M from bag fees during the first half of 2009. The $130m is an estimate for a year.
You miss the point of my argument. I'm saying that the amount of business Southwest gains only captures a small percentage of the business that AA loses; it's better to look at the overall revenue picture than just extrapolate WN's revenue increase.
(You also seem to be glossing over the previous discussion where we identified that American earned bag fees in the past from overweight and third bag fees, so only about $150M of your $220M is an increase over previous years.)
Also (and this too has been previously pointed out), customers don't have to go to other airlines to cost AA revenue. They can decide to drive or take the train or not travel instead as well--these factors cost AA money and don't show up on any other airline's books.
True, but what percentage of this is due to bag fees? SW is telling us that from all airlines this account for $800 over a year. Unless you believe that people are leaving AA due to bag fees, but not UA, CO, DL, NW,... then the revenue reduction in AA is not due to bag fees. If bag fees were the only issue with AA, they will be the most profitable airline in the world.
The point of the argument is that airlines (like AA) that adopted fees aggressively are losing substantial portions of their market share and revenue to airlines that have not. Southwest is just part of the picture. What if American's overall revenue had declined only at the rate that Southwest's had? They would be ahead by over $200M
a quarter, after taking the effect of bag fees into account. Now, obviously we don't have a way to determine whether bag fees are the only thing responsible for the delta, but even if they're responsible for half they're still causing a net decline of revenue.