American Airlines Sued for $5M After Refusing $25 Lost Bag Refund

July 22, 2010— -- Danielle Covarrubias was understandably upset when she discovered that American Airlines had lost her suitcase, but she became really mad when the airline then refused to refund her $25 baggage fee. That's when she decided to sue American Airlines for $5 million.

The class action lawsuit, filed on behalf of Covarrubias of Pierce County, Wash., is the first since American Airlines started to charge a fee for handling and transporting luggage in June 2008, according to industry experts. The airline was the first major carrier to impose such fees.

"It just goes to show you how enraged people are by the lack of common-sense regulation in the airline industry," said George Hobica, an aviation expert and creator of airfarewatchdog.com. "It doesn't make any sense at all that somebody should charge for a service and then screw up and not give you your money back."

The case stems from a flight Covarrubias, who lives in Pierce County, Wash., took from Seattle to Grand Rapids, Mich., last May. She paid a $25 fee for her lone piece of luggage but the bag never arrived at its final destination.

"This case … is about an entire industry that has lost touch with its customers," Casey Ingels, one of Covarrubias' lawyers, said in a statement.

Covarrubias, 35, waited for the next flight to arrive but her bag -- with more than $800 of her possessions -- wasn't on it, court papers said. She spent more than $300 on new clothing and toiletries and then waited another 24 hours for news from the airline.

"In her last conversation with American Airlines … she was told nothing could be done," the lawsuit said. The airline refused her demand for a refund of the baggage fee.

An American Airlines spokesman said the carrier was reviewing the lawsuit and offered no immediate comment.

"We already do allow customers to include a checked bag charge refund request in their baggage claim if they file one for other damages and the claim is accepted for full or partial payment," said the spokesman, Tim Smith.

It was unclear whether Covarrubias filed such a claim.

According to court papers, Covarrubias isn't alone: American Airlines damages, loses or delays more than 2,400 pieces of luggage every day.

Class Action Lawsuit Attacks Airline Baggage Fees

"American Airlines is just another example of how companies have forgotten about customer service," Covarrubias said in a statement released through her lawyers. "When American charges a fee for a baggage service it should deliver your bag, unharmed, or give you a refund."

In a bid to increase revenue, American Airlines took what it called the "extraordinary measure" of charging baggage fees in 2008, the lawsuit said. It charged a fee of $25 for the first checked bag, $35 for the second, $100 for the third, fourth and fifth pieces, and $200 for every bag thereafter.

All the major airlines except Southwest and JetBlue now charge for checked bags -- United Airlines was tops in bag fees, raking in $400 million last year from them.

The fees, the lawsuit said, represented a "clear and unambiguous agreement with passengers to handle bags with care, and deliver them to their destination in a timely fashion."

While the majority of checked bags reach their destination without incident, a total of 2,193,711 bags were reported mishandled by airlines last year in the United States. American Airlines was second on the list with 299,257 reports; Southwest Airlines led the pack with 357,525 reports.

Passengers can claim a maximum liability of $3,300 for domestic flights should checked luggage be lost in transit. International limits are lower, roughly $100 for every 2.2 pounds of luggage, for a maximum total of $640.

Travelers can buy excess valuation for luggage as secondary insurance. A dollar buys $100 worth of extra insurance on domestic flights, with a ceiling of $17 for $1,700 in coverage.

Airlines are required to reimburse passengers for clothing and toiletries in the event of a lost or delayed bag, according to the U.S. Department of Transportation. But getting the cash back can take considerable time.

Many airlines' contracts of carriage, between carriers and passengers, don't specify clothing reimbursement in detail, but standard DOT policy demands they provide some compensation.

Hobica said it's often more reliable and cheaper to send your luggage out ahead of time -- by courier.

"I sent an envelope via FedEx ground and they misdirected it and they gave me an automatic $100 check without even asking," he said. "I always tell people send your bags by FedEx ground. It's cheaper and they have more accountability."

Experts Say Baggage Fees for Revenue, Not for Handling Bags

Todd Curtis, an aviation expert and founder of Airsafe.com, said baggage fees were imposed to raise revenue and have nothing to do with the timely delivery of luggage.

"As far as the mechanics of how bags get transferred from your hand to the airline and back to your hand again, nothing in the technology has changed," he said. "I've seen nothing in the way of airlines investing in new or more efficient or more effective technology for baggage handling because of the baggage fees."

Curtis added, "It's a question of balance of common sense versus what the airline will give back to you. Obviously, if you have a $3,000 suit, you can put it in your carry-on and have your Kmart clothes in the checked bags. That's the way I'd do it."