Baggage Fees and Unintended Consequences
Yesterday, Spirit Airlines, the low cost carrier out of Florida, announced that they will be charging for carry-on baggage for the first time. They already charge for checked baggage, like most US carriers today. In addition this those fees, they will begin charging for any carry-on that does not fit in the space beneath the seat in front of you.
So essentially your backpack or briefcase will be okay, but not your roll-aboard or duffel.
You can read all about it pretty much anywhere on the web, here's a sample:
NY Times: Less Baggage, More Revenue and Big Savings to Airlines
One of the better discussions I read about this was the NY Times piece, which talked about the impact of what all these fees have had on the overall airline operation. Many articles have talked ad nauseum about the financial impact -- some say good, some say bad. You can't help but ogle the ancillary revenue figures, but of course there could be long-term loyalty loss, and Southwest seems to be doing just fine without charging for bags.
But few folks have gone in depth on the operational impact of the baggage fees.
With the advent of baggage fees, fewer travelers checked bags. More and more fliers used carryon bags instead, and overall reduced the amount of luggage they took. This has led to three changes:
1) Fewer checked bags
2) More carry-on luggage
3) Less overall weight
Fewer checked bags has, as the article states, led to fewer lost bags and fewer injuries for baggage handlers. This means a lower load for the baggage system overall, lowering costs for airlines assuming they can adjust their cost structure appropriately (which is actually a very big assumption). At the same time, they get the revenue benefit. Seems like a win-win. There's an additional benefit: Loading and unloading baggage from a plane is often the turnaround time bottleneck. That's right -- it's not how fast you can get passengers off and on, it's baggage. Theoretically, with fewer bags, baggage handlers can be more efficient with each plane and remove that as a bottleneck.
BUT, more carryon luggage now shifts the bottleneck to passengers, as the increase in carry-on luggage makes the boarding and deplaning process longer. It also leads to lots of last minute checked bags, surely reducing the efficiencies gained elsewhere. So the real question is whether the increase in carry-on luggage more than offsets the time savings from checked baggage? There is little evidence of any overall efficiency gain, but that doesn't mean it's not there. For one, with all the things going on at the gate, it's hard to measure. And secondly, it would only work if airlines fine-tune their baggage and gate operations to take advantage of this shift. In all likelihood, they have not.
Finally, overall weight reduction means less fuel costs, more room for cargo (fewer bags help also) and less of a chance that passengers need to be bumped for weight at hot, high, or short airports.
So how does Spirit's carry-on fee change this dynamic? For one, it pushes more bags to be checked, since the fees are lower. That might be good for passengers, but it adds burden to the baggage bottleneck. Second, it will just plain piss people off.
The beauty of the checked baggage rule is that it not only was a revenue driver, it also had the ancillary benefit of taking burden off of the baggage handlers, a costly constraint on operations. But by driving bags back to the luggage compartment, Spirit is doing itself no favors. If that's what it takes to have the infamous 9 cent fares that Spirit offers -- well, that could be a fair trade-off. But a note for all the other airlines out there: This probably won't work for mainstream travelers, you best not even try.
Posted by Evan
