A couple of weeks ago, the WSJ published an interesting article on how airlines are slowly changing their policies regarding the handling of checked and non-checked bags:
this was an awesome read! but one question - why does operational efficiency = social efficiency? given that customers *believe* checked baggage actually *reduces* flight times (even though that is not the case), how does your definition of social efficiency consider the psychological benefits associated with allowing free checked bags?
Good question. Operational efficiency doesn't mean always social efficiency. There are situations in which the most efficient solution for the firm is not actually the most societal efficient. When I say "social" I mean adding all the values and the costs across the entire system (passengers, and airlines).
"Hidden Fees" - I still feel somewhat duped when using Google flights, go through the process of choosing my flights, and then see that the pricing was just for Basic Economy and that I need to pay $10 to $100 more to actually select my seat, have a carry-on, etc. I know that Google flights has an option to show the prices with a carry-on included, but that doesn't always seem to work.
If I can't easily see the full price when I am making my decision, than the fees are somewhat hidden.
Somewhat hidden, but if you choose to fly Spirit you know what you sign up for. I am not talking about all the small fees (fuel surcharge, etc), but about bag fees, choosing a seat, etc.
Yes, you know generally to expect to have the opportunity to pay for additional services, but most people probably don't have a good feel for how much those additional services are priced. That awareness gap is what drives the feeling that the fees are "hidden" or "surprise." The lowest cost base fare gets the most attention from the consumer and then they invest time in starting the booking AND THEN get hit with the opportunities for additional fees. If seat selection + 1 carry-on was always $50, then I could just mentally add that to the "flight-only" fares in Google Flights to make a more balanced initial assessment.
this was an awesome read! but one question - why does operational efficiency = social efficiency? given that customers *believe* checked baggage actually *reduces* flight times (even though that is not the case), how does your definition of social efficiency consider the psychological benefits associated with allowing free checked bags?
Good question. Operational efficiency doesn't mean always social efficiency. There are situations in which the most efficient solution for the firm is not actually the most societal efficient. When I say "social" I mean adding all the values and the costs across the entire system (passengers, and airlines).
Fanny packs counting as a personal item?! This is an outrage!
"Hidden Fees" - I still feel somewhat duped when using Google flights, go through the process of choosing my flights, and then see that the pricing was just for Basic Economy and that I need to pay $10 to $100 more to actually select my seat, have a carry-on, etc. I know that Google flights has an option to show the prices with a carry-on included, but that doesn't always seem to work.
If I can't easily see the full price when I am making my decision, than the fees are somewhat hidden.
Somewhat hidden, but if you choose to fly Spirit you know what you sign up for. I am not talking about all the small fees (fuel surcharge, etc), but about bag fees, choosing a seat, etc.
Yes, you know generally to expect to have the opportunity to pay for additional services, but most people probably don't have a good feel for how much those additional services are priced. That awareness gap is what drives the feeling that the fees are "hidden" or "surprise." The lowest cost base fare gets the most attention from the consumer and then they invest time in starting the booking AND THEN get hit with the opportunities for additional fees. If seat selection + 1 carry-on was always $50, then I could just mentally add that to the "flight-only" fares in Google Flights to make a more balanced initial assessment.