American Airlines will refund $7.5 million to travelers for baggage fees

American Airlines has agreed to pay $7.5 million to settle a class-action lawsuit from passengers who alleged they were wrongfully charged baggage fees.

Five passengers filed a federal lawsuit against American in February 2021, in Fort Worth, Texas, where the airline is based. The customers claimed they were forced to pay bag fees at an airport counter even though the tickets they purchased online from the airline included free checked bags. One passenger paid the fee at the airport, then later requested a refund from American Airlines and was told no, according to the lawsuit. 

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An American Airlines representative declined to comment on the settlement. Court documents filed by the carrier last year show the company denied the allegations, arguing that the passengers did not deserve refunds.

The settlement avoids a trial in the case, which was set to begin in August. 

The $7.5 million will be used to refund customers who paid checked baggage fees between 2013 and 2021, according to a court order. To collect a refund, passengers must submit email proof they were charged baggage fees on an American Airlines ticket that included free checked bags, the order states. Travelers who booked a flight using an American Airlines-branded Citibank or Barclays credit card are also eligible those cards offer free baggage check.

The airline also may have to pay administrative and attorney fees for the class-action members, which would be separate from the $7.5 million, court documents show. 

American charges $25 each way for one bag checked on economy class flights within the U.S., Canada, Puerto Rico or the Virgin Islands and $35 each way for a second checked bag.

The settlement comes nearly a month after President Biden proposed new rules designed to crack down on hidden airline fees. The proposal would force airlines and third-party booking sites to disclose any potential add-on costs, like cancellation fees or baggage fees along with the ticket price. Providing a breakdown of each fee would help customers make more informed decisions when they purchase airline tickets, the Biden administration said. 

Extra fees are big business for companies like American, Delta and Southwest. U.S. airlines generated $1.8 billion in baggage fees in the second quarter this year, federal transportation data shows. The top 20 airlines globally generated a total of nearly $21 billion in baggage fee revenue last year, down from about $33 billion in 2019, according to an estimate from IdeaWorks.