American Airlines Disputes $5 Million Lost Bag Lawsuit

July 27, 2010— -- American Airlines disputes the charges leveled against it in a $5 million class action lawsuit over a lost bag, but the woman who filed the suit is not backing down.

Danielle Covarrubias flew the airline last may from Seattle to Grand Rapids, Mich., and paid $25 to check her bag. She made it to her destination on time, but her bag did not. She claimed she sued the airlines when officials refused to refund the baggage fee.

American told ABC News that it disputes some of Covarrubias' details.

The bag did arrive, just a day later, American said. And Covarrubias never contacted the airline about the delayed bag or to seek a refund, airline officials claim.

"We at American Airlines have not been able to find any record of Ms. Covarrubias ever contacting or speaking to us about her delayed bag, a possible claim, or the subject of checked bag charges," spokesman Tim Smith said in an e-mail to ABC News. "Any of our customers who choose to file a baggage claim with American Airlines are always welcome to include a request for a checked bag fee refund as part of that claim. That is the proper procedure for any customer to seek a refund on a checked bag charge."

David Ongaro, a lawyer for Covarrubias, said the airline's statement is "not true."

Stay Up to Date on the Latest Travel Trends from ABC News on Twitter

As for the arrival of the bag, Ongaro said it doesn't matter that it showed up the next day.

"There's a contact that's entered into when the parties pay that baggage fee and the contract is that you are going to deliver that bag with the passenger at the location," Ongaro said. "If the bag isn't delivered, then there's a breach of that contract."

"It would be the same thing if I said to you: Oh, you're having a party Saturday. I'll come by and mow your lawn for $100. You give me the $100 and I show up Tuesday to mow your lawn. It's not what you bargained for and I shouldn't get to keep the $100," the lawyer said.

Are Airline Checked Bag Fees Too Much?

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."

For Covarrubias, the case isn't just about one bag but, according to her lawyers, "an entire industry that has lost touch with its customers."

Covarrubias, 35, was flying that day from Seattle to Grand Rapids, changing planes in Chicago. However, her American Eagle flight to Michigan was canceled. So American bought her a ticket on a United flight for that final leg.

When she arrived in Michigan, her bag -- with more than $800 of her possessions -- wasn't on it, court papers said. She waited for the next flight and her bag still wasn't there. She ended up spending more than $300 on new clothing and toiletries.

United ended up delivering the bag the next day, American said. It is common practice in the airline industry for the last carrier to transport a passenger on a leg of their trip to look after that customer and to locate and deliver bags regardless of which airline lost the bag.

United is not a party to the lawsuit and declined to comment.

"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, the suit said. American said such a claim never was filed.

Class Action Lawsuit Attacks Airline Baggage Fees

According to court papers, Covarrubias isn't alone: American Airlines damages, loses or delays more than 2,400 pieces of luggage every day. The Department of Transportation says that American and American Eagle mishandled 30,223 bags in October, the last month available. That's 975 bags a day.

"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 the first checked bag -- 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.

Experts Say Baggage Fees for Revenue, Not for Handling Bags

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."

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."