PhotoThe nation's airlines have gone from economic basket cases to profitable enterprises since the end of the Great Recession, thanks in large part to baggage fees.

Airlines, with the notable exception of Southwest, now charge extra to check a bag. Consumers hate it, but there's an interesting study that suggests this move not only helped airlines' bottom line, it has helped them leave the gate on time.

Here's how: because passengers hate paying these fees, they avoid checking bags if possible and instead drag as much carry-on luggage as they can on board. While that may be annoying to fellow passengers, Mazhar Arikan, a University of Kansas business school professor, notes it reduces the time needed for ground crews to stow checked luggage aboard the aircraft.

"Because passengers changed their behavior, less weight went into the plane below the cabin," he said. "This offset any changes in carry-on luggage, and it helped airlines improve their on-time departure performance. The below-the-cabin effect dominates the above-the-cabin effect."

Up to four minutes earlier

Arikan and his fellow researchers found airlines improved their median departure time between 3.3 to 4.2 minutes. Departure delays declined 1.3 to two minutes. The deciding factor, the researchers found was whether an airline charged for the first or second checked bag.

The changes even spilled over to Southwest, which does not charge for the first two checked bags. The researchers suggest that's because baggage fees in general have created a cultural shift – passengers are now geared toward less checked luggage and more carry-on bags, regardless of what airline they are flying.

Lost opportunity costs

That said, the research shows Southwest's performance did not improve as much as its fee-charging rivals, hurting one of the carrier's historical competitive advantages. Arikan goes so far as to argue Southwest's “Bags Fly Free” policy is actually costing the carrier in lost opportunity, since he says the airline could be offering more flights each day.

All in all, Arikan says it's a unique way of looking at the whole issue of checked bag fees. Previous research, he notes, has focused solely on the economic effects of the checked bag fees.

The researchers contend the time fluctuations are significant because departure times and mitigating delays are critical indicators of performance. They can also affect the number of flights airlines can offer and their image among potential customers.


Share your Comments