Saturday, September 24, 2011

Tragedy of the commons, air travel edition

I'm traveling this weekend, meaning I get a chance to talk about something that has mystified/frustrated me for a long time: the bizarre economics of airplane baggage.

As anyone who has been on a plane in the last ten years has noticed, you can't check bags for free anymore.  The reasons for this change are less than obvious.  They could range from legitimate (too much baggage was driving up fuel costs) to avaricious (more fees!).  Regardless, the result has been both predictable and irritating.  Instead of checking bags, every airline passenger brings the maximum carry-on allowance (one bag and one "personal item" -- which, thanks to the magic of statutory construction, now usually means "another bag") and stows it in the overhead compartment. 

Ultimately, giving away this good (overhead space) for free creates the same problem that giving away any good for free will create (shortages of overhead space).  What's worse is that the suitcase companies have responded in kind, creating special bags that are specially designed to maximize usage of overhead space while still complying with carry-on size regulations.  Consequently, not only is the overhead space used up quickly, overhead space is used to carry the maximum amount of cargo by weight and volume.  

Overuse of the overhead compartments relative to the cargo hold might be a relatively efficient outcome if it were actually preferable to transport luggage in the passenger cabin.  But I can't see why that would be the case.  In fact, the passenger cabin seems like the worst place to transport cargo, because packing it full of bags frustrates tight timetables and poses safety and convenience problems for passengers.  Boarding is more chaotic, debarking is more chaotic, accessing personal items during the flight is more difficult, and so on. 

What's more, if the idea was to reduce fuel costs by reducing weight, the new policies aren't terribly successful in that regard either.  Although there is an incentive for passengers to check less baggage, there is no incentive to reduce carry-on use. 

The whole situation is analogous to attempts to reduce air pollution by placing a hard cap on harmful emissions.  While you might reduce pollution overall, you're also guaranteeing that every factory will lower emissions by whatever amount necessary to get under the cap, and no more.  And any factory (or passenger) who was under the cap to begin with will happily increase their emissions (or luggage volume) until they hit the cap. 

The solution to the luggage problem isn't to create unwieldy regulations, then, but to actually price in the externalities of additional luggage weight.  In other words, airlines should charge a basic fee for a seat, and then extra for each marginal pound a passenger brings aboard.  And when they're boarding, passengers should get to choose whether or not to carry on an item or just to check it through to their destination.  More bags would get checked and overhead space would be reserved for items that passengers actually want with them on the plane. 

Okay, passengers might resist at first.  They'd have to get their luggage weighed at check-in!  It would be annoying.  But in the end, everyone wins -- including the passengers, who could reduce ticket costs by packing light, and whose airfare would no longer include a subsidy for the carry-on bags of the man in seat 21E.

Of course, this raises a second question: what about the other marginal pounds a passenger brings aboard?  In other words, should fat people pay more for air travel?

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