I hate airlines' practice of charging to check bags even though I rarely check bags. But I understand the economics. Strangely, Matthew Yglesias does not:
I have to say I’m not really very sympathetic to this sentiment, or with the current Southwest Airlines ad campaign slamming bag fees. If you figure an airline is going to believe it can acquire a given amount of revenue per passenger from a given route, the bag fee doesn’t actually alter this level, it simply redistributes it from those traveling with no checked bags to those traveling with multiple bags. Nobody is made worse off on average by this. But at the margin bag fees do encourage people to pack less stuff which reduces the weight of the plane and thus reduced fuel consumption and carbon emissions.
The economics of charging checked bag fees is pretty simple. The fees lighten plane load but encourage passengers to carry on more luggage. That means a longer boarding time as more passengers stop to load bags in the overhead bins and hunt around for empty bin space. Charging for checked bags thus can make everyone worse off: those traveling light (usually business passengers) must spend more time boarding the plane and waiting for take off in cramped seats; those traveling with checked bags must pay more to fly.
Once one understands this, it's easy to see why legacy carriers charge bag fees and Southwest does not. Southwest's business model relies on quick turnaround. Its planes may stop at a gate for just 25-30 minutes. Southwest has determined this is worth more than the marginal savings in fuel cost and handling costs. So Southwest does not charge bag fees and trumpets this policy as a concern for its customers.
The legacy carriers don't even attempt Southwest's quick turnaround; they allow 30-40 minutes just to board, which usually isn't a big deal to them because their planes sit at the gate for so long. The legacy carriers charge bag fees because the fees save them money on bag handlers, save some fuel, don't hurt their turnaround times and -- one presumes -- are actually passed on to their customers rather than being absorbed in the ticket price. This means, of course, that bag-checking passengers actually pay a higher net price. But even if business travelers see a corresponding reduction in their ticket prices, this does not mean that the bag fees are cost-neutral, as opposed to revenue-neutral. They pay an off-the-books cost by having to endure more congestion. The bag fees are cost-neutral only if the business ticket prices fall enough to compensate business travelers for that extra congestion. I doubt that's the case.
The bag fees are analogous to charging tolls on a lightly-traveled road in order to force drivers onto a congested road. That evidently makes sense in the bizarro world of airline pricing, but it doesn't make the policy cost-neutral.