If anything, we need more extra luggage charges
Fliers love to complain about bag fees.
They love to complain so much that Southwest Airlines has built an entire ad campaign around the fact that, on their planes, "bags fly free." The carping is loud enough that even elected officials have gotten in on the fun. In the midst of last year's holiday travel season, Sen. Mary Landrieu introduced legislation that would have enshrined in law every American's right to check at least one piece of luggage, on the house.
Spirit Airlines, it appears, does not care how much you hate bag fees. On Thursday, the company announced it would begin charging up to $100 for some carry-on bags. Not checked baggage, mind you. Carry-ons.
Spirit was already one of the only airlines with the gumption to force you to pay to load your bag in an overhead bin. It will now charge customers $35 for a carry-on when they book their ticket, and $50 if they settle up at check in. Only those who show up to the gate without having already paid will get hit with the full, whopping $100 fee.
THE MYTH OF FREE BAGS
A few customers will undoubtedly be angered. There will be gripes. But frankly, we should wish that more airlines acted like Spirit, at least when it comes to their pricing.
The reason boils down to customer choice. When you fly a large legacy airline, such as Delta or United, you're already paying for your carry-on bag. You just don't know it. All of those pieces of luggage add weight to each flight, which forces the plane to burn more expensive jet fuel during the trip. Airlines don't just eat that expense. Rather, the cost is simply bundled into the price of your ticket. Worse yet, if you only bring on board a small item that can fit under your seat, your ticket is probably subsidizing the jerk four rows up who packed a bowling ball in their duffel bag.
The same principle applied with checked bags. Before airlines started charging for the service explicitly, the cost of carrying luggage had to be spread evenly among customers, whether they packed a 50-pound roller-suitcase or carried on a 2-pound tote.
Spirit has unpacked all of these luggage costs. As a result, they can offer dirt cheap basic airfares, then pile on fees for additional services. As Ray Neidl, an airline industry anaylst with Maxim Group explained to me, the system has allowed the company to lucratively market itself to less affluent customers, who can keep down the price of flying by traveling light.
The key word there is lucratively. This past quarter, customers paid an average of more than $50 a piece in fees, which accounted for about forty percent of the airline's revenue, helping it to turn a $23 million profit. By comparison, Southwest, which also bills itself as a low-cost airline, finished the quarter with a loss, once you exclude special items from their accounting.
Aside from giving customers more control over what they pay, charging fees in lieu of pouring everything into the cost of a ticket also helps tamp down on business costs. Again, take the example of checked bags. Charging nothing encouraged more customers to pack heavy. That forced airlines to pay more workers to staff their baggage operations. It also meant heavier planes and higher fuel costs. Charging for luggage has led to fewer checked bags, and shrunk those expenses, Morningstar analyst Basili Alukos told me.
Charging for carry-ons will also convince some customers to pack less, and the $100 gate penalty will likely make people think twice about trying to game the system by sneaking by with a carry-on. Again that means lighter planes and more room in the overhead bins, which could end the vicious jockeying between passengers for space that economist Donald Marron has playfully deemed "a tragedy of the commons" for air travel.
MORE BAG FEES, PLEASE!
If charging for carry-on luggage is such a great idea, though, why aren't more airlines doing it? In the case of Southwest, it's marketing. The company believes going fee-free will attract more customers to their flights. Most other major airlines, meanwhile, feel constrained by their customer base, Neidl says. Large legacy carriers make most of their profits off of frequent business class flyers, who would bristle at paying extra for a suit bag. Instead, the cost will go, unseen, into their ticket.
Of course, all of this needs a caveat. The fairness of a fee-for-service system depends on a company's level of transparency with customers. If charges are masked in fine print, they simply become a way of fooling fliers into shelling out more than they intend to pay. Spirit itself has a somewhat spotty record with fare transparency, and it would be a pity if unsuspecting customers started getting whacked with $100 charges.
But as long as the company is upfront about their charges, really, there's no reason to gripe.
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