New Proposal Lets You Sell Your Unused Checked Baggage Allowance

You have a free checked bag through your airline credit card, but you’re traveling with just a carry-on. You’re wasting value! A reader once checked a bottle of body wash to use their elite status benefit, just for shits and giggles. The bottle didn’t make it. Meanwhile, the passenger next to you needs to check a bad and has to pay. Why shouldn’t you be able to sell them your unused allowance? You’d get something for a benefit you weren’t using. They’d pay less than the airline’s bag fee. It’s an appealing idea, and a new economics paper proposes a market for transferable baggage rights. But the idea doesn’t work. Airlines count on some passengers not checking bags. If you make every unused allowance available for sale, and you’ve changed the cost of the benefit. That changes what an airline is willing to include in a ticket, give elites, or sell to a credit card partner at the current price. The Paper Proposes A Market For Extra Baggage Weight A new paper in the Review of Economic Design proposes trading rights to checked baggage weight above a baseline allowance, within a capacity limit set by the airline. It outlines a market in which passengers who value carrying more can buy rights from others. Trading directs the available capacity to those who value it most. Who gets the rights initially determines who receives the money. Any real version would need to transfer the allowance through the airline. The buyer would check their own bag, under their own name. This couldn’t become a business where strangers pay you to put your luggage tag on their suitcase. Remember when you’d get asked at check-in if you packed your bags yourself, and whether they’d been outside of your control? Unused Bag Allowances Are Baked Into The Price Consider 100 passengers entitled to check one bag each and normally, only 60 do. There’s going to be some variation, but the carrier isn’t going to carry 100 bags every flight. That’s breakage, broadly understood: a benefit can be valuable to customers while costing the airline less because not everyone uses it. It isn’t ‘waste’. The benefit is option value. And a customer may even value the benefit fairly across a portfolio of flights, rather than at the retail total value for every flight they take. A more efficient distribution of the free checked bag benefit means more total bags checked, more baggage handling and more fuel burn. Now the benefit is a cash credit that imposes real, greater costs on the airline. The paper essentially frames airlinea as currently keeping the value of something passengers ought to be able to sell. That doesn’t seem correct. Transferability would make the benefit more valuable, it would also be more costly to the airline and effectively a different product from the one in the market today. More Allowances Used Doesn’t Always Mean More Weight It wasn’t just body wash. Someone once checked a single beer can. And I once wrote about a passenger checking a single pickleball on Southwest also back when the airline included two checked bags. How much this costs the airline depends on what the buyer of one of these checked baggage allowances would have otherwise done. If they were already going to pay to check the same suitcase, selling them your waiver doesn’t add a bag. It transfers some of the airline’s fee revenue to you and saves them money. (Nobody was going to check a beer can or a pickleball anyway.) If the cheaper allowance persuades them to bring an additional suitcase, or pack more, there’s more weight, handling, and fuel consumption. On a constrained flight, that can displace cargo or other bags. If they move an existing carry-on into the hold, the aircraft’s total weight may barely change. There may be more handling cost, but less competition for overhead bins and potentially easier boarding. So it’s not actually true that this will one-to-one burn more fuel. In some cases it just increases bag handling by the airline (replacing bag handling by the passenger, but potentially speeding up boarding) and in some cases it means the same bags, just less bag fee revenue. Airlines Already Allow A Limited Version Of This Ryanair allows passengers on the same booking to pool checked-baggage allowances. Two passengers who each bought 20 kilograms can split that as 15 and 25 kilograms, subject to the maximum weight for an individual bag. That makes the purchased allowance more useful. Making baggage rights tradable though would force airlines to revisit the price of the original bundle. They might offer fewer allowances, raise fares and some flights no longer make economic sense at the margin if they face a combination of higher fuel bills and less fee revenue. Topics on this page