The Airline/Logistics/Supply-Chain/Operation industries have always intrigued me. I saw this tweet by @jasonfried and that got me started.

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Now read this really interesting article by Eric. A lot of what I have to say below, is lifted from the article.

Why major airlines hate carrying your baggage:

• In today’s world it only makes business sense to link up with airlines on other routes. This implies there will be frequent aircraft changing. If a passenger travels from A > B > C > D, they are going to want to check their bags in only once (A > D. Period.Thank you). But assuming route C > D is handled by a regional airlines using a non-Boeing 737 aircraft, the airlines is going to have baggage transfer problems. If they say “travel with all the baggage you want”, there will be more baggage than the regional feeder aircraft(presumably smaller) can accommodate, and lost/undelivered baggage is probably reason 1 for passengers to start a hate-airlines movement.
• They don’t want the liability for tracking and reuniting you with a bag left behind because of network mismatch (all the more a probability when you handle routes A>B>C>D>…X ).

Why it works for SWA:

Clearly, South West Airlines (SWA) have an agenda with this. Ok, maybe nothing malicious or diabolical but definitely something they wish to work for their favor. The whole “please check your bags” mantra boils down to Time saving. The “Time is Money” concept cannot be more truer in the Airline industry. Time spent on the ground means time not in the air. Airlines only make money when the jet is flying. Check baggages… Turn flights faster… Create more profit!

• Airlines get most of their revenue from quick business travelers who anyway travel light. So the marketing campaign by SWA adds good will at almost no additional cost.
• Checking in bags is faster for the airlines i.e faster for them to load & unload baggages than for passengers to carry and store in overhead bins. Think 5000 checkpoints for cabin bags, not to mention the “Ah C’mon that’s just 10ml more liquid than the 100ml limit! I ain’t carrying any explosive gelly yo, just some hand moisturizer!”.
• SWA are pros in Fuel Hedging (see below for definition). So checking in bags saves time and saving time by turning aircrafts faster means more revenue for the fuel already purchased.
• They operate only Boeing 737s. baggage capacity consistent with passenger load. They can get their baggage handling streamlined and know what to expect. Consistency => Reliability => Understanding what to expect.
• They operate specialized and focused routes – SWA’s successful business model involves flying multiple short, quick trips into the secondary (more efficient and less costly) airports of major markets (No question of A>B>C>D).

Other interesting stuff:

• Fuel Hedging – Basically advance purchases of fuel, at a fixed price, for future delivery.
• SWA hedged 70% of fuel requirements in 2008 (I repeat 70% ) and here’s the kicker they saved approximately $3.5 billion doing it.
• Many a time passengers think the airlines lost their luggage. In actuality, the airline couldn’t accommodate it so they chose to pay a premium to deliver it to you later (often at the cost of your loyalty and future business).

I agree with Eric’s article on the tracking technology thing. This isn’t as difficult as it sounds. But the “pay the passenger to check bags” idea, I’m still doubtful. Why this campaign will tragically tragically fail in India :)

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