Why the Uproar to Spirit Airlines Solution to the Tragedy of the Commons?

Tragedy of the Commons describes a circumstance where a group of individuals acting responsibly and conscientiously will ultimately exhaust a commonly shared limited resource. Take a community where each family has a small herd of cattle and a commonly owned grazing area. It is in each family’s interest to feed their cattle well and to expand their herd. This is fine as long as the amount of land exceeds the demand. But at some point, as herds grow, the demand exceeds the supply. Each family will rush to get to the grazing land, depleting it even more rapidly, with the tragic consequence that no one will have any grazing land. The solution is to sell the land into private hands. Then each family will preserve their land area and raise only the number of cattle feasible for that area … or a family can buy or rent land from a neighbor if they wish to expand.

As Donald Marron recently pointed out, the overhead bin space on airplanes is similar to a tragedy of the commons scenario. With most major airlines (except Southwest) now charging for checked bags, there is more demand for overhead space. People are trying to avoid the checked baggage fee. That overhead space is a “commons” area, and it is hard to assign property rights.

Spirit Airlines has decided to charge $20-$45 per carry-on bag … and here is the part that keeps being left out of the story … while simultaneously dropping fares on most flights by about $40 and their already discounted prices. In other words, there is no net cost difference for the traveler who typically flies with one carry-on bag (and you can still bring on board whatever will fit under your seat.) You actually get a discount off of what you had been paying if you can fly without using the overhead bin. Since you already have to pay for checked baggage, and some people were bringing bags as carry-on only to avoid the checked fee, some will now just go ahead and check the bag at no extra cost, thus freeing up more overhead space and improving boarding and deplaning.

In fact, frame it this way. What if Spirit Airlines had said they would leave their airline fees the same but give a $45 discount to passengers who managed to fly without bags? There is no difference. Would this be cause for outrage?

So what is the big deal with Spirit Airlines? U.S. Senators, led by Chuck Schumer, are now proposing legislation to stop airlines from charging carry-on fees.

Schumer and five other Democratic senators — New Hampshire’s Jeanne Shaheen, Maryland’s Ben Cardin, Minnesota’s Amy Klobuchar, and New Jersey’s Robert Menendez and Frank Lautenberg — support legislation that would tax airlines if they charge carry-on bag fees.

Schumer said the legislation will move forward until it becomes clear that no airline will institute the charges. He will have an uphill battle changing the minds of Spirit executives when he meets with them soon.

What business is it of Congress to decide how airlines will structure their fees? Why is the uproar about what appears to be a very sensible way for Spirit Airlines to manage their own commons tragedy?