Mead and Hunt

There’s Gold in Them Bins

Enjoy this guest post by one of our Minneapolis office architects, Matt Dubbe, AIA, NCARB, LEED® AP, who examines the latest trends in baggage fees. Matt has national experience on projects that are recognized for their environmental and contextual excellence.

At a national aviation conference this spring, a panel of airline representatives admitted that the impacts of instituting baggage fees were not fully vetted. As one airline explained it, the fees were put in place to offset the rising costs of doing business. In that regard, this tactic was wildly successful. Adding to their windfall was the fact that the collected revenues were not subject to sharing with the various airports since this was not a part of intact operating agreements. The profits were a sorely needed boost to the airlines, which had suffered multiple setbacks in the past decade.

Now for the unintended consequences.

Those passengers who paid baggage fees for checked luggage were immediately resentful that other passengers were bringing similar-sized luggage onto the airplanes to place in the overhead bins. When baggage fees were first put in place, national load factors (percentage of occupied seats) were lower. As the numbers of flights were reduced on a national scale (capacity), the load factors began to rise due to sheer demand. Economics 101 in play here. Flights were now becoming substantially full throughout the entire system.

Conceptually, most airplanes do not come with an equal amount of overhead bins as seats. They certainly are not prepared to store oversized roller luggage, plus-sized laptops bags and jackets. When they fill up or the bags do not fit, the passengers have to move upstream against boarding passengers and gate-check their items. This can impact on-time departures, which in turn affects customer satisfaction. And the lost revenue to the airlines for all those trying to bring their bags on board for free can be significant.

To deal with the unintended consequence of delays and to speed up the boarding and disembarking process, Allegiant Air recently became the second airline to charge for carry-on bags placed in the overhead bins, following Spirit Airlines initiation of carry-on bag fees. One can only imagine that the other airlines will watch the public’s reaction with bated breath. Anything short of a wholesale mutiny will probably encourage them to implement yet another fee to the growing ala carte offerings. Airports will demand that the pie is shared and revised agreements will be the new battleground between the two aviation partners.

What’s next, you ask, for revenue generation for the industry? One needs only to look at the basic services that are included in the cost of an airline ticket and wonder.

About Guest Blogger

Mead & Hunt’s robust Aviation Services team includes a number of professionals experienced in everything from air service to engineering, architecture, sustainability, planning, and related services. You’ll get to meet some of our team here, blogging about their experiences, know-how and the latest industry news. For more about our Aviation-related services, visit our Markets web page.
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