Striking the Right Balance: A Comprehensive Examination of Luggage Charging Models
In the airline industry, a question arises about the suitable approach airlines can use to improve their luggage handling and pricing diligently. On the one hand, airlines are presented with the approach of integrating luggage prices with tickets, while on the other hand, airlines are subjected to price luggage as single entities. Therefore, this study will explore both approaches and establish how both can help airlines maintain a good reputation and steady revenue.
Separate Luggage Fees: Unveiling Operational Advantages
While observing the advantages of charging luggage fees separately, Mumbower et al. (2022) underscore that the approach can lead to Transparency. Also, separate luggage charging permits airlines to choose a more transparent pricing model. Therefore, the approach allows consumers to make more educated purchasing decisions and ensure proper comparison with airlines. Besides, airlines can also use luggage tags separately to increase their revenue generation. Therefore, charging them for luggage becomes a crucial airline auxiliary revenue element.
In addition, by charging a separate luggage fee from the basic fare, airlines can have other revenue-generating streams, which can help cover the other costs or enhance profitability. Research by Mumbower et al. (2022) suggests that carrying luggage for a separate cost can increase flexibility. Airlines can encourage the approach by charging cabin baggage, giving passengers more choices about the level of service they want. Moreover, many travelers carrying just a carry-on luggage could foresee lower travel costs. Hence, the process benefits heavier luggage travelers since baggage allowance is given priority.
Although charging luggage is a viable approach in the commercial airline business, it also poses significant challenges. One of the challenges is Perceived Lack of Value. Ren et al. (2022) note that separately charging for luggage may lead to a perception among passengers that they are being charged for essential services. Therefore, the approach can result in dissatisfaction and erode customer loyalty, particularly if passengers feel that the overall value proposition of the airline is diminished. On another note, charging luggage separately from the air ticket can cause Complexity and Confusion(KELLOGG SCHOOL OF MANAGEMENT AT NORTHWESTERN UNIVERSITY, 2015). Therefore, having separate luggage fees from the airline ticket can complicate the booking process. Also, Passengers may need help navigating the countless fees and options, leading to frustration and dissatisfaction with the overall travel experience. Separate luggage fees can also create customer service issues, such as disputes over baggage allowances. Hence, separate charges can detract from the passenger experience and require additional resolution resources.
Including Luggage in the Total Ticket Price: A Customer-Centric Approach
While looking at the approach of merging luggage price with ticket, Mumbower et al. (2022) note that it can create an environment of Simplicity and Convenience. Mumbower et al. (2022) also note that incorporating luggage in the ticket’s total price simplifies passengers’ booking process. The approach can also reduce confusion and streamline the purchasing experience. Another advantage of incorporating luggage fees is thatPassengers may perceive more excellent value in airline services. This approach can enhance customer satisfaction and loyalty, leading to repeat business and positive word-of-mouth recommendations. Additionally, through the approach, customers can enjoy Reduced Friction. Integrating luggage into the total price can help reduce friction during the travel experience, as passengers do not have to worry about additional fees.
While the approach of an all-inclusive payment can be viable for airline users, Ren et al. (2022) note that there is a probability of Inflexible Pricing.Including luggage in the ticket’s price may result in less flexible pricing options for passengers. Passengers who do not need checked baggage may perceive the bundled price as less competitive, especially if they are forced to pay for services they do not use.
Comparative Analysis: Weighing Pros and Cons
While comparing both approaches identified by this study, several critical recommendations can be considered to better the outcomes of airline services. Regarding expenses, a system of separate fees can ensure that airlines maintain efficient cost management. On the one hand, adopting an all-inclusive payment allows Transparency and Flexibility among the end users. On another note, adding luggage to the total ticket makes the booking process less complex and raises the perceived value for customers. However, the approach may create inflexible pricing and lead to airline revenue loss. Therefore, the best solution depends on the airlines and travelers’ unique situation and overall market trends.
Conclusion
The argument on whether airlines should charge separate luggage costs or include them in the overall ticket price sheds light on the importance of managing operational efficiency. On the one hand, the debate underscores that separate fees enable airlines to save on fuel and offer Transparency and flexibility. On the other hand, the research underscores that incorporating luggage charges into the essential ticket cost simplifies and improves the passenger experience and creates an enhanced perceived value. Additionally, the approach can lead to an absence of flexible pricing and revenue loss for airlines. Therefore, the comparative analysis shows that both approaches have advantages and disadvantages. Hence, the suitable solution is determined depending on the particular conditions and needs of airlines and passengers. Overall, achieving the balance between clarity, flexibility, and affordability is critical for airline companies to continue having good reputation, continuous revenue, and customer satisfaction in a progressively competitive business world.
Reference
KELLOGG SCHOOL OF MANAGEMENT AT NORTHWESTERN UNIVERSITY. (2015). Who Benefits from Airline Baggage Fees? Kellogg Insight. https://insight.kellogg.northwestern.edu/article/who-benefits-from-airline-baggage-fees
Mumbower, S., Hotle, S., & Garrow, L. A. (2022). Highly debated but still unbundled: The evolution of U.S. airline ancillary products and pricing strategies. Journal of Revenue and Pricing Management. https://doi.org/10.1057/s41272-022-00388-5
Ren, X., Pan, N., & Jiang, H. (2022). Differentiated pricing for airline ancillary services considering passenger choice behavior heterogeneity and willingness to pay. Transport Policy, 126, 292–305. https://doi.org/10.1016/j.tranpol.2022.08.001
write