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In Defense of Spirit Air; Schumer's Meddling is Good Politics, Bad Government

Sure, carry-on baggage has traditionally been free. But so what? Why should any business be forced to maintain legacy pricing as times radically change and business circumstances dance and morph around it?
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Can we take a moment out from Tea Parties, Goldman Sachs and volcanic ash to celebrate, yet again, the grandstanding behavior of our senior senator, master of the grand voter-suck-up dance move.

For those who missed the festivities, let me summarize. Spirit Air, not exactly a carrier that people change their plans in order to accumulate frequent flier miles with, announced that it was going to charge up to $45 extra per carry-on bag.

Jumping to the defense of all those who shlep the equivalent of a small self-storage locker with him, and in attempt to staunch the spread of carry-on fever contagion, Senator Schumer personally and heroically contacted the CEOs of American Airlines, Delta, JetBlue and US Air, and got them to agree that they wouldn't charge for carry-on baggage.

This is a constituent-pleasing move that is also a complete legislative over-reach. It's wrong on every level. I'm certainly no cheerleader for the aviation industry. In fact, back in February I wrote a piece for PoliticsDaily demanding that the FAA institute a fresh burst of transparency. But Spirit Airways, facing the same financial crunch as every other airline and every other company, should be able to devise and implement their own pricing response to the economic situation they're in.

If Spirit would rather raise prices selectively than universally, if they think they can improve their bottom line by charging carry-on customers and leaving others untouched, if they believe that they can actually encourage fewer carry-on customers and thus lower the weight of their planes and reduce fuel costs, why should the meddling schmoozer Schumer stand in their way? And why should he use his considerable senatorial muscle to terrorize other airlines into not adopting the same or similar policies.

Spirit, in fact, is using a series of financial incentives to encourage a behavior change. This is based on behavioral economics, a theory that is actually much beloved by the Obama administration. Higher carry-on fees will encourage people to bring fewer bags, thus reducing congestion on the plane, allowing for faster departure and more efficient runway operation. (How much time have you spent steaming in the aisle as someone with a fanny pack tries to cram a bulging bag into a tiny bin?) It will also mean lighter planes and a smaller carbon footprint.

Keep in mind that this is a surcharge for carry-on bags, not for checked bags. If a passenger doesn't want to pay for the privilege of having their tote conveniently stashed under their seat or in the overhead, they can check the thing. Essentially, Spirit is putting a time value on money: wait for your bag and pay with time; have it with you and pay a premium. There are many businesses that charge you more for superior and faster service. I don't see why the airline business shouldn't be one of them.

Sure, carry-on baggage has traditionally been free. But so what? Why should any business be forced to maintain legacy pricing as times radically change and business circumstances dance and morph around it? To use legislation to maintain the status-quo, even in this passenger-pleasing case, sets a dangerous, anti-innovation precedent.

Singling out one visibly unpopular industry for his personal intervention is good politics but bad government on Schumer's part. Actually, he could spend every waking hour being a legislative enforcer of add-on pricing strategies. Every website that gives you free service up to a point - and then tries to up-sell you to a premium service - what Chris Anderson calls the "freemium model" - could suddenly appear on Senator Schumer's regulatory radar. And what about package goods companies that do the opposite - rather than raise their prices, they downsize the box, keeping it the same size but filling it with 15 percent less product?

Senator Schumer would better serve his constituents and the nation if he spent less time worrying about what's under his seat, and more time trying to climb out of the pocket of the banking industry.