Why a (Social Security) COLA Might Be Too Sweet
October 14, 2021
October 2021 Friday’s e-links: What Homer (Simpson) Says About Fashion
October 15, 2021
The story of the overhead baggage bin is about more than a suitcase.
It is also about revenue and seat selection:
https://xkcd.com/726/
Overhead Baggage
During May 2008, American Airlines was the first legacy carrier to impose the “checked-bag fee.” Because they charged us $15 for the first bag, we had the incentive to check less and carry more on the plane. You know the results. There just was not enough room. Soon though, United and U.S. Air (now a part of American) started to charge also. Then, in 2017, saying we had a new option United gave us “Basic Economy.” Called a “bare-bones” fare, it just included the seat. You had to pay for the bin. Spirit is one of the other airlines that also charges.
On new single aisle planes from Boeing and Airbus, all of our luggage will fit in the overhead baggage bin. On a 737 MAX 8, planes with the Space Bin boost their luggage capacity from 118 to 178, enough for each of its 172 passengers. In our featured image you can see that where four bags originally fit, now six do. Then though, with less incentive to check bags, airlines get less revenue.
Our Bottom Line: Thinking at the Margin
Economists like to tell us that we are always thinking at the margin. Defined as the “place” where the extras exist, the margin is where we decide to sleep an extra 15 minutes or eat more ice cream. Our profit margin tells us how much revenue exceeds cost.
The rationale for the bigger baggage bin takes us straight to the margin. It enables extra luggage on the plane, fewer people complaining, fewer dollars allocated to baggage check. When passengers know the bin won’t be full, they create fewer delays trying to check their luggage. After boarding, they won’t delay takeoff by trying to find that last empty overhead bin space and then to try stuff the suitcase where it won’t fit. Also, with fewer checked bags, airlines get less revenue. But perhaps most crucially, our stress levels drop when we know there is a spot for our bag.
My sources and more: Always a handy source for airline information, the Middle Seat Column had the big bin story. I also like to check Wired and found bin articles, here and here. (Please note that our featured image is from Wired. Also, several sentences from today were in a previous econlife post.)
