Does anyone here really think that in the absence of baggage fees, ticket prices wouldn't simply rise to compensate? Taking advantage of customer price sensitivity is pretty much the entire ballgame for airfares.
I think Southwest has proven this not to be the case. Their fares are consistently lower than the majors in spite of having no bag fees and their bottom line sure doesn't seem to be hurting any.
You could argue that the level of service isn't commensurate with what you'd get on a Delta or AA so its not the same product - but I'd say personally that my experiences with Southwest are far more pleasant than my dealings with any of the others.
You could argue that the level of service isn't commensurate with what you'd get on a Delta or AA so its not the same product
The people who would argue this are probably the ones who also earned status on a legacy carrier before they started really turning the screws on people in 2008, and thus have been immune to all the bag charges and seat fees all along.
But, if you have no status on AA/Delta/United, you'll probably find you'd get a better level of service on Southwest, at least based on my experiences from having flown them recently.
The dirty secret is that Southwest is not cheaper than the majors... I fly ~30 round trips per year and almost always will take the cheapest flight. In the past year, that was Southwest 3 times. I fly out of Chicago and actually prefer the midway airport that southwest flies out of.
to quantify: http://web.mit.edu/airlinedata/www/2009%2012%20Month%20Docum...
For a long time LUV had lower fares (significantly cheaper than majors from 1995-2007), but they no longer do.
I agree. For such a capital-intensive business, the airline industry is extremely competitive. Airlines operate on the slimmest of margins, which is why they have to be clever about how to extract value from their customers (commercials on takeoff, credit card offers in-flight, baggage fees).
I think overall ticket prices would rise much more slowly.
First off, baggage fees are now tax free. That gives a huge incentive to maximize increases there.
Second, consumers will simply pick a flight based on lowest cost, not realizing the exorbitant baggage fees. Regular business customers will either already be using carry-on only, or the business will eat the cost. Consumers usually don't fly that much, so they'll fall prey to the misdirection, probably forget by the time they fly again, and will likely consider x bags a necessity.
Hidden in the graphic and thus far unmentioned in the comment thread is the staggeringly stupid fact that IRS made revenue from baggage fees tax-free in January 2010.
This has to rank as the stupidest IRS decision of all time.
The rise of baggage fees incentivizes passengers to carry on as much luggage as possible. It seems that the fight for overhead bin space is getting more intense, and it is taking longer to complete the boarding process. I would have thought the airlines would have wanted to incentivize passengers to check bags, as that makes the whole process more efficient, so I would have expected them to assess fees on carry on bags.
iirc, we had a discussion here about this here some time in the past.
jetblue and southwest don't charge for the first bag specifically because of this. their processes are optimized on the assumption that you're going to check one bag. it helps them to get more flights in per day, when people can get to their seats and they can get the plane in the air faster.
it might actually do well to provide a ticket discount if you check a bag, in order to ensure that there are limited delays. but that would require an airline to care, and most don't seem to.
It's not quite as shocking when you compare with overall revenues.
For example, Delta had $28B in 2009 revenues compared with $482M in baggage fees, for just under 2% of total revenues.
As a side note, as long as you can get your bag through the xray scanner you should just bring it to the gate. They may not let you carry it on, but there's no fee for gate-checked bags.
Airline baggage fees are good for you! Here's why: They are the a la carte portion of your ticket.
If consumer groups succeed in limiting airlines' ability to charge such fees, airlines will need to figure out other ways to monetize your travel, some that may be more difficult avoid.
Take a gander at the new IMGUR-powered links, I think the new one should do the trick for just about any monitor size. What do you think? http://imgur.com/pCF1l?full
Thanks for the feedback! We're still not at Good/Mint-caliber infographics, but we hope to get there: http://www.good.is/infographics
I have a friend who's obsessed with all things airlines, and he insists that airlines were losing money on ticket sales all through the'90s and '00s, and that all their profits came from selling frequent flyer miles to credit card companies, who could use them as incentive to spend money.
Given the financial collapse, I wouldn't be surprised if the airlines are hurting and need to pull money from somewhere.
Which was probably all due to baggage fees. In fact that graph shows $2.5 billion in baggage fees charged in the US alone (your articles shows $2.5 billion worldwide, and I bet most of it is in the Asia-Pacific region).
Airlines had been steadily losing money from 9/11 up to 2009, except for a few low-cost carriers.
