Air Canada (AC) is fending off a customer backlash after it announced plans to ban carry-on bags and impose a seat selection fee for its lowest-fare customers starting in the New Year.
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Starting January 3, basic fare passengers on trips within Canada and the U.S., as well as sun destinations such as the Caribbean, will have to check all bags for a fee — $35 for the first item and $50 for the second. Small personal items such as a purse or laptop bag will still be allowed on board for free.
Canada’s largest airline also said that as of January 21, lower-tier customers will have to pay if they want to change the seat assigned to them at check-in. This is not the first time that Air Canada has tried to implement these additional charges. It announced a seat selection fee on its lowest fares a year ago but canceled the policy amid a backlash from travelers.
Big Bucks
The latest changes come as Air Canada uses ancillary fees to raise its revenue. The Montreal-based carrier already charges extra for checked bags, on-board snacks, and Wi-Fi access. The airline took in nearly $2 billion in ancillary revenue in 2022, according to airline consulting firm IdeaWorksCompany.
Air Canada says the new changes align its fare structure with other Canadian carriers. However, the newest changes put the company at odds with many of the largest U.S. carriers, such as American Airlines (AAL), that still allow passengers to bring carry-on bags onto flights at no extra charge.
AC stock is up 38% so far this year.
Is AC Stock a Buy?
Air Canada’s stock has a consensus Strong Buy rating among 12 Wall Street analysts. That rating is based on 10 Buy and two Hold recommendations assigned in the last three months. The average AC price target of $26.82 implies 3.81% upside from current levels.
