Why do airlines charge for bags

Every airline has a different policy when it comes to charging fees for your luggage. On the other end, budget airlines such as Frontier and Spirit won't let you take any bags on the plane for free — even a carry-on — meaning they might not be the smartest options for travelers with lots of baggage. We compared the baggage fees for eight different US-based airlines to see how they stack up.

Take a look at the graphic below to help you decide which airline you should take for your next trip. For you. World globe An icon of the world globe, indicating different international options. Get the Insider App. Click here to learn more. Grumpy passengers squeeze into uncomfortable seats in overcrowded cabins and are served stale snacks.

In fact, in the past week three airlines —Air Canada, WestJet, and JetBlue—announced that they would raise checked-bag fees. More airlines are expected to follow. Airlines started charging extra for checked bags about 10 years ago. Initially, the fee was only supposed to apply to a second bag, but within months the first bag got a fee, too.

And it is not just baggage fees that are going up. Airlines now charge for basic services , like the ability to choose your seat in advance or to use the overhead space for your carry-on. Paying for something that used to be free feels wrong. But in this case, it is something to celebrate. In the good old days of air travel most services—food, baggage, leg room, and everything else—were bundled together, so everyone paid for them as part of their airfare.

But then came deregulation and the internet, which empowered customers to comparison shop. Suddenly, airfares got very competitive and it became nearly impossible to raise fares above rivals on the same route.

In , a U. That legislation went nowhere. But the fact that baggage fees became a political target at all raises an interesting question: Why have they suddenly proliferated despite the fact that they make customers angry? Lariviere and two colleagues, Gad Allon and Achal Bassamboo, also professors of managerial economics and decision sciences at the Kellogg School, have tested the merits of two different rationales that airlines have given for the fees.

One rationale for baggage fees is that they allow airlines to charge different customers different prices according to customer characteristics that the airlines do not directly observe. This self-sorting, in turn, allows the airline to more profitably serve different types of customers. Claims from some airline executives suggest some truth to this rationale.

Imagine if you went to the restaurant and all the meals came with dessert. It was about persuading people to change their travel behavior—to travel with carry-on luggage only. To test these rationales, Lariviere and his colleagues built an economic model of airline pricing and baggage fees. By charging baggage fees—and encouraging customers to avoid checked bags—operating costs for the airlines fall, since they need fewer check-in staff and luggage handlers, and their planes use less fuel.

This synergy creates lower ticket prices for the customer, meaning that more people can afford to fly, which is good for the airlines.