Why Baggage Fees Are Likely Helping Airlines Lose Money
So, I was boarding a flight recently and realized the real effect of baggage fees beyond customer dissatisfaction and general proof point of airline industry desperation to make any money.
As I was boarding the flight, everyone had a carry-on and a small bag. Everyone's observation is that passengers are now incentivized to carry on as much as possible to avoid the fees. What was interesting is how much it slows down the boarding process when almost everyone has a carry-on. For this one particular flight, the plane was delayed in taking off for two reasons: a) the gate agent had to wait for them to tell her if there was anymore room on the plane for additional carry-ons and b) carry-on bags that didn't fit were gate-checked (at no charge to the passenger).
It'd be interesting to see how much the airline loses for every minute they stay on the ground because if it's a relatively large amount, say $100, then staying on the ground for an extra 10 minutes would cost the airline $1,000. I suppose as long as they're making more than that in baggage fees, it's worth it. We know from Southwest's business model that their planes are on the ground for fewer minutes than any other airline, a source of competitive advantage.
My guess is the baggage fees might outweigh the flight delay costs by a little, but if you add in the customer ill will caused by this policy, I would contend it's a losing proposition.
