It’s been a while since we have posted about airline baggage fees, one of my favorite topics. As I have argued before (see here or here), baggage fees are interesting since they serve as a way to regulate passenger behavior and potentially lower airline costs. Fewer bags means less labor in loading them on and off planes or tracking down lost bags. It also potentially means less weight if passengers actually bring less stuff aboard. But how much is any of that worth? Are we talking about pennies or dollars or thousands of dollars?
The folks at FiveThirtyEight have tried to answer part of that question (Why Budget Airlines Could Soon Charge You to Use the Bathroom, Jun 30). More specifically, they look at the negative impact of adding extra weight to the average flight (or the gain to be had from shedding weight). Here is how they described their methodology.
Our analysis takes into account the distance of a flight, the weight carried onboard the aircraft, and the aircraft type itself. It then simulates every phase of the flight, from departure gate to arrival gate, in order to determine the fuel consumed at each moment along the flight path. To get an idea of how adding small amounts of weight can affect fuel burn on a typical flight, we analyzed a flight from Boston to Denver operated by a Boeing 737-700. Southwest Airlines operates this service three times per day.
According to our model, the total cost of fuel for operating this flight with 122 passengers (85 percent of the maximum seating-capacity) is about $7,900. Each marginal pound onboard the aircraft for this flight will result in a marginal fuel cost of a little less than 5 cents. So if every passenger remembered to go to the bathroom before boarding, shedding an average of 0.2 liters of urine, the airline would save $2.66 in fuel on this flight alone. Such tactics are not off limits. Ryanair famously contemplated charging customers to use the bathroom (in an effort to reduce the number of on-board bathrooms and pack on more seats). Company spokesman Stephen McNamara said in 2010, “By charging for the toilets we are hoping to change passenger behavior so that they use the bathroom before or after the flight.”
So at first glance, that suggests that a fee to pee would not save very much. But that conclusion ignores two factors. First, it costs a lot to move even an empty plane (about $6,600 for the Southwest flight in their example). So a few bucks here and there represents a nontrivial chunk of the costs they actually control. Second, airlines operate at a huge scale. As the article notes, there is a Southwest flight taking off somewhere every 24 seconds. A few bucks for each flight then starts to add up. They estimate that if everyone on every Southwest flight were to carry a cellphone, Southwest’s fuel costs go up by $1.2 million. Replace that cellphone with a tablet and the number becomes $7 million — which is better than having everyone schlep a laptop ($21.6). The most interesting point is that any of those options is way better than installing a proper in-flight entertainment system, which would nearly $40 million in costs.
There are, I suppose, points here one can quibble about. All of these numbers rest on a ton of assumptions from the weight of a tablet to the load factor of the flight to the cost of fuel. Further, different airlines have very different fuel usage (see here). Nonetheless, it is an intriguing analysis. It sheds light on the difficulty firms in a tough, competitive industry face in optimizing their operations. Southwest or any other airline has very little say over which electronics consumers carry aboard, meaning that a chunk of their fuel usage is out of their control. However, a fee here or fastidious enforcement of carry-on rules there can make a real difference in total costs.