Saturday, January 19, 2008

Frontiers of Cost-Benefit Calculations

A little more than a year ago, in response to a Wall Street Journal article on airline travelers' lost luggage, an insightful reader offered a more in depth analysis:

"Airlines lose luggage because there is no incentive to correct the problem. It would cost money to fix the broken systems, and there is no meaningful penalty on airlines that lose baggage because our government allows airlines to pay pennies on the dollar for what is lost. Even worse, the threat of lost luggage actually benefits the airlines by forcing passengers to avoid checking luggage."

Armstrong, Arthur O. 2007. "Perpetual Curse of Lost Luggage." Wall Street Journal (27 January): p. A 5.

I have not heard whether or not the paper ever hired this contributor.

4 comments: said...

I was not aware that airlines wanted people to avoid checking luggage. If anything I have been under the impression of just the opposite, that they have been trying to get people to check more luggage because they do not like overstuffing in the overhead bins, which can lead to luggage falling out and hitting people and engendering lawsuits and so forth. Heck, it is people themselves who are constantly trying to carry on oversized luggage so that it does not get lost and so they can just walk off the plane with it.


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Anonymous said...

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Ken Houghton said...

The second post is spam; knowing that, the third can be deleted as well.

In response to Barkley, I note that one of my cohorts and I had luggage lost for the first day of the AEA. This resulted in our wearing less than optimal clothing the next day, which meant among other things that I had to cancel interviews.

The incremental cost to the airline (transporting two bags from the airport to the Hilton) was significantly less than would have been optimal to dissuade them from misrouting our bags--and probably the other six or seven people who had the same result.