In Defense Of The Checked Luggage Fee

by Barron YoungSmith | May 21, 2008

Over at Washington Monthly, Kevin Drum has whipped himself into a populist frenzy about American Airlines' new $15 checked luggage fee:

I don't know anything about airline economics and obviously the American Airlines executive team does. Still, the kind of sleazy pricing practices they and the rest of the domestic industry are adopting, where advertised fares mysteriously rise 20% by the time you actually board the plane, seem like exactly the kind of thing designed to wreck their long-term business. People really don't like the feeling of being cheated and lied to. The industry's answer, I suppose, is that they have to survive in the short term in order for there to be a long term, and that's true enough. But if the problem is a secular, broad-based increase in fuel costs that hits everyone equally, I'm still a little stumped about why a blizzard of fees is supposed to be a better solution than simply raising prices a bit across the board.

I'm not sure announcing a $15 fee for checked luggage far in advance is a "sleazy pricing practice," any more than raising the price of a hamburger or hiking fees on a toll road. The economic justification here has to do with reducing weight: as fuel costs go up, airlines are struggling to find ways to cut down on how much kerosene they burn. Unless they want to redesign their fleet, the only way to consistently improve fuel efficiency is to cut out unnecessary ballast. (This also reduces the environmental impact of air travel.)

The luggage fee will force passengers to think twice about packing a suitcase with items they don't need ("It's my industrial strength hair dryer! And I can't live without it!"). By contrast, if AA just raised prices across the board, it would scare away paying customers--rendering the airline less competitive, rather than reducing costs and improving its bottom line.

--Barron YoungSmith

Source URL: http://www.newrepublic.com//blog/the-plank/defense-the-checked-luggage-fee