I don't mind paying for something if the amount charged actually covers the amount of the expenses for said service. I see this hurting the baggage handlers. First, people are going to stop checking bags which means fewer handlers are going to be needed leading to lay offs. That's real good in this economy. Second, how much of the money made from this extra fee is actually going to go to the baggage handlers. I know alot of the fee if for the fuel but can someone break it down? Hypothetical:
- $1 - Ticket agents checking the bags
- $3 - Baggage movement infrastructure, conveyor, scanners, etc.
- $4 - Baggage handlers
- $7 - Fuel
Let's play a better hypothetical Let's say that flying a particular flight segment profitably requires $40,000 under the current cost structure, which includes handling and hauling bags under the old baggage tariffs and restrictions. The airline sets it's revenue structure accordingly to meet that revenue requirement.
When the airline starts charging money for bags, many passengers are now motivated to find ways to get by at their destination with less luggage. So let's say that with the reduced weight in the luggage hold of the airplance plus reduced staffing requirements to handle luggage, that flight segment now only requires $39,000 revenue to be profitable.
That's means that, as a society, we are new providing the same service for $1000 less. That's the knife of economic efficiency in action.
That gets to a fundamental economic principle. When you charge people more directly for the components of a particular good or service, they refine their economic behavior to obtain what they want more economically.
Now the overall efficiency of doing this for airline baggage might be minuscule in comparison with the overall economy. But economic efficiency is driven by millions of businesses each making their own infinitesimal improvements, But all of those minuscule improvement aggregate into something large and effective.
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Another hypothetical. Let's say a manufacturer of vehicles offered a standard set of options on every model - premium sound system, sun roof, power windows, leather interior, tinted windows, instrument package, etc. Things that most people enjoy, and it comes for "free" with every car. Now the manufacturer comes along and says, "Hey Now. We're going to stop bundling all of that stuff. From now on our price will be the basic model without any added features. If you want any of those features we'll still provide them but we're going to charge extra."
If that happened, a lot of car buyers would decide they could get along without a premium sound system, without a sun roof, without power windows, without cloth interior, etc. Of course that would mean that there would be a decrease in employment among the workers who are presently installing all of that equipment in cars now.
Do you think that would be bad? Would you be worrying about how that decision would affect those workers? Or would you select the options you want, and keep for yourself the difference between what the fully loaded vehicle would cost and the vehicle you do select?
And wouldn't you then turn around spend that money you saved on something else that is more valuable to you than the the options you gave up. And when you spent that money for that something else, wouldn't that
benefit workers in some other industry by the same amount of injury caused to the autoworkers?
In the end what happens under the new pricing scheme is that you buy a vehicle that has fewer options, and spend the money you save on something else that is more valuable to you than the automobile options you gave up. Some workers are disadvantaged by your decision, but that is totally offset by benefits to a different set of workers.
You've spent the same amount of money, but you've gotten more value for the money you spent. The effects on workers cancel each other out.
