ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Sunday, October 1, 2017

Separate Bag Fees Raise the Cost of Flying

Three peer-reviewed studies have each concluded that travelers who pay an additional fee for luggage pay more than they did, on average, when bag costs were included in the airfare.   This finding was first reported by the Los Angeles Times.

Airlines started "unbundling" their services such as food, drinks, luggage and now even reserving seats in an alleged effort to give passengers the option of only paying for what they want.  

Officially, airfare rates have fallen over the past three consecutive years, but with the added luggage fees, flying is actually more expensive.

Since airlines by and large charge the same prices for things unless, perhaps, you have good frequent flyer credit with them and can book tickets months and months ahead of time, your contractual bargaining power with them will be almost zero.   Take it or leave it!

http://lawprofessors.typepad.com/contractsprof_blog/2017/10/separate-bag-fees-raise-the-cost-of-flying.html

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There is an important piece of information from this article and the underlying report. (I do not know whether the three studies on which the report is based have this information, because they are not identified.) What proportion of passengers pay baggage fees? If airline costs are constant and undergo unbundling, we should precisely expect that the amount paid by those with luggage goes up while the amount paid by those without goes down, because those who have no luggage are no longer subsidizing those who do. Relatedly, I'm a little uncomfortable with applying the take-it-or-leave-it slogan to the rare situation of actual consumer choice.

Posted by: Jack | Oct 1, 2017 11:30:52 AM

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