Sam Kemmis | NerdWallet
First it was Ubers. Then it was Wendy’s hamburgers (except the fast food chain clarified it was technically dynamic pricing, not surge pricing). But now, the real deal — surge pricing — is targeting your checked bags.
JetBlue quietly (sneakily?) introduced “peak” and “off-peak” pricing to its checked bag fees on March 22, a fact the world was alerted to because my editor happened to check the JetBlue website. That means you have to pay $5 to $10 more each way for checked bags on JetBlue when flying during busy travel times, such as the summer, much of the winter and some random weeks in the spring.
It’s a classic example of surge pricing — a type of dynamic pricing where companies only increase prices during times of high demand, but don’t lower pricing during times of low demand.
Technically, these new dynamic baggage fees won’t affect all customers like the blanket increases some other airlines, such as Alaska and Delta, recently added. Yet they also mean more complication and confusion for customers who are trying to figure out which airline offers the lowest total price for a given route.
Dynamic prices are nothing new in the travel industry. In fact, prices that rise and fall based on the balance of supply and demand are taken for granted in everything from airfare to hotel rooms and rental cars.
What’s new is how these companies are fluctuating the price of the add-on fees many travelers are growing to deplore.
And airlines are increasingly relying on these add-on fees for revenue. In 2023, airlines made a record $117.9 billion worldwide in ancillary fees, according to airline consulting firm IdeaWorksCompany and car rental technology platform CarTrawler. About $33.3 billion of that was baggage fees.
Some industry experts say the move to more fluid fee prices has been a long time coming.
“Airlines have had capabilities for years to price fares based on demand. Why not other fees as well?” says Jay Sorensen, president of IdeaWorksCompany.
Sorenson notes that many airlines have been dynamically adjusting the price of seat assignment fees for years. The cost of choosing a window seat near the front of the plane for a particular flight might cost more in December than in February because of increased demand.
Yet, it seems like airlines have been so preoccupied with whether they can make more money from increasingly complex fee structures that they haven’t stopped to think about whether they should.
What makes a fare fair?
It all comes down to how we think travel companies should price their products. Sorenson thinks we are holding airlines to a standard to which we don’t hold other retailers.
“Shopping for an airline seat is like shopping at a grocery store,” he says. “If the grocery store was required to tell you beforehand how much you were going to spend, it would be ludicrous.”
The base fare is more like the shopping cart into which we toss other add-ons, such as seat assignments, premium seating upgrades and baggage. It’s up to the consumer to compare prices at different airlines, just as it’s on them to compare prices at different grocery stores.
According to Sorenson, if JetBlue decides to charge higher prices for baggage around the holidays, we can choose whether to pay the extra cost or choose an airline that doesn't do that.
In my opinion, charging extra for checked baggage during busy times is like charging extra for the carton that holds your eggs. It seems like an additional unexpected fee meant to catch most consumers off guard rather than a fair price for a valuable item.
No matter what your thoughts are on flexible travel fees, it's obvious that they will become more common in the future. What's the solution?
Strategies for dealing with flexible fees
It's not practical to keep track of which travel companies are imposing which fees at specific times. I struggle to do so, even though it's my entire job.
Instead, it's useful to understand which airlines generally have higher fees and to avoid those brands if you want any extras at all.
For instance, Frontier Airlines charges $157 per trip for basic additional fees while Southwest Airlines charges $0, according to the most recent NerdWallet analysis.
So the easiest advice is to fly with Southwest Airlines. It doesn't have variable fees because it has very few fees overall. Two checked bags per person are complimentary.
If that's not feasible, you might think about obtaining a co-branded airline credit card, many of which provide free checked bags. Because baggage fees are getting more complex, this type of credit card allows you to completely avoid dealing with them, similar to paying for Spotify Premium to avoid ads.
Lastly, try to avoid seat selection fees if you can. These fees are sneaky and hard to compare between airlines, but they're nearly always optional. And as Sorensen indicates, they are essentially charging for something that costs the airlines nothing.
He says, “When something is pure profit, my advice to airlines is 'don’t be so greedy.'”
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The article Flexible Pricing Is Coming to Everything in Travel originally appeared on NerdWallet.
