Baggage Fees: Fliers hate them, but they work

As travelers gear up for holiday travel, they Southwest now stands alone as the only U.S. airline to let passenger check a bag or two for free. And baggage fees account for 2.4 percent of all airline revenue, up from .55 percent before 2008, when many airlines started charging for even one checked bag.

In this edition of Smith Business Close-Up, host Jeff Salkin visits the Smith School to sit down with Martin Dresner about his new research that shows the upsides of baggage fees: not just improved the bottom lines for airlines, but also better on-time records and fewer customer complaints about lost bags.

Dresner, chair of the Smith School’s department of logistics, business and public policy, explores the dynamics of baggage fees in two recent research papers. His research focuses on two broad areas, air transport policy and logistics management. He has published papers in leading transportation and logistics journals, as well as journals in related fields, and has co-authored a book on supply chain management. He has testified before the House Aviation Subcommittee, and has worked on consulting projects for a number of organizations, including the Maryland Aviation Administration and the U.S. Department of Energy.