Will Europe’s planned luggage rules kill the budget airline business model?

A one-way easyJet ticket from London to Glasgow costs just £21. But add a bag — beyond the handbag-sized free allowance — and the price doubles. 

Chief executive Kenton Jarvis says this shows the airline’s “amazing value”. Yet the carrier and its rivals are facing a challenge from European lawmakers who think it is closer to a consumer rip-off. 

The European parliament has proposed changes that would allow anyone to bring on a 7kg bag alongside a laptop or rucksack bag for free. The move — branded “lunatic” by Jarvis this week — threatens to strip back baggage fees that have become a high-margin revenue stream for many of the region’s low-cost operators. 

For budget carriers that dominate Europe’s skies, the change would also upend a taut business model in which every minute spent on the ground is precious. 

Jay Sorensen, an expert on airline charges who runs the IdeaWorks consultancy, warned that such a move would “mess with the income mechanics of a low-cost carrier” resulting in higher fares.

He estimates European-based airlines collected $16bn in bag fees last year, with about 60 per cent going to low-cost carriers. While bag fees are not normally broken out, wrapped in with “ancillary” charges alongside food sales and seat bookings, Sorensen estimates they contribute to just under a fifth of total revenues for budget airlines. 

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With intense lobbying from the industry and consumer groups under way, it is unclear when a final decision will be made.

Andrey Novakov, a Bulgarian MEP who is the parliament’s lead negotiator on the baggage rules, said the aim was to “fight for clearer, more predictable rules for airlines and a stronger aviation sector, but never at the expense of passengers”.

Beuc, the European consumer association, has firmly backed the parliament’s proposals, arguing that the weight of the extra bag should rise even higher to 10kg. 

Consumers “expect their hand luggage to be included in their flight ticket price”, director-general Agustín Reyna said. Forcing passengers to pay relegates luggage to a “luxury item”. 

However, a survey commissioned by industry lobby group Airlines 4 Europe found that half of all passengers would prefer to pay lower fares and keep bags as an optional extra. “Different passengers need different things, and only they should decide which services they want to pay for — not regulators,” said managing director Ourania Georgoutsakou.

Consumers, more used to dealing with bundles and added charges in life, are also perfectly able to navigate the current system, argues Wizz Air chief executive József Váradi. 

“People are a lot more savvy, defining themselves as a consumer with needs,” he told the FT. “This industry has become a lot more transparent than before.” 

However, not everything is as clear-cut. The UK’s advertising regulator this week reprimanded easyJet for what it said were misleading bag prices on its website. 

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It is not just lost charges that pose a risk for low-cost carriers. Their business model is built to eliminate fuel costs and each minute spent on the ground, and more bags add weight, cost and time.

Passengers who might otherwise travel light will bring extra baggage if allowed, argues Augusto Ponte, European director at consultancy Alton Aviation. “Add those extra 2,3,4kg per person, that’s 500kg of extra weight, which works out at $20-25 extra of fuel per hour.” 

Multiply that by a million hours — the amount roughly flown by easyJet — and it adds £25mn of running cost a year, or about a tenth of the airline’s total profit. 

Then, there is the issue of turning planes quickly, which is at the heart of the low-cost model. Ryanair, for instance, has aircraft with retractable steps to avoid waiting for the airport to provide stairs, all in order to guarantee its planes spend no more than 25 minutes on the ground. 

An extra 150 overhead bags on each flight will cause a delay of roughly 10 minutes, even before the issue of reloading the excess ones into the hold, added Ponte. Over the course of a day in which short-haul planes typically fly six times, that adds up to an hour’s less flying per aircraft. 

“The industry is already stretched to the seams,” he added. “If you’re easyJet or Wizz, that changes the game.” 

At first glance, the extra free bag on a low-cost airline might seem to be a boon for passengers. But Europe’s air fares, which are lower than the US, are kept low by the competitiveness of the budget operators, according to analysts. If they raise prices, flag carriers such as British Airways and Lufthansa will be sure to as well. 

“Global network carriers only have reasonable fares on those European routes because they are compelled to by easyJet, Wizz and Ryanair,” said Sorensen. 

“Europe is lucky to have them because without them, they would be complaining about really high fares from everybody.”