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American Airlines Institutes Checked-Bag Fee

As rising fuel costs drag down airline profits, American Airlines is instituting a $15 fee for every bag a customer checks. The fee will be in effect for all tickets bought after June 15. The nation's largest airline is also cutting back service and capacity.

While consumers are likely to react with outrage at the new fee, analysts expect other airlines to follow American's lead. United Airlines has already announced that it is "seriously studying" a new baggage fee.

The new fees and reductions in capacity could lead to an airline industry that looks much different than what Americans are used to, with fewer seats available on fewer flights for more money. "The airline industry as it is constituted today was not built for $125 [per barrel] or $135 oil," Gerard Arpey, American's chief executive, told reporters. "It can't continue in its present state."

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