Dynamic pricing is coming for everything in travel

First it was Ubers. Then it was Wendy’s hamburgers (except the fast food chain clarified it was technically dynamic pricing, not surge pricing).

But now, the real deal — surge pricing — is targeting your checked bags.

JetBlue quietly (sneakily?) introduced “peak” and “off-peak” pricing to its checked bag fees on March 22.

That means you have to pay $5 to $10 more each way for checked bags on JetBlue when flying during busy travel times, such as the summer, much of the winter and some random weeks in the spring.

It’s a classic example of surge pricing — a type of dynamic pricing where companies only increase prices during times of high demand, but don’t lower pricing during times of low demand.

Technically, these new dynamic baggage fees won’t affect all customers like the blanket increases some other airlines, such as Alaska and Delta, recently added. Yet they also mean more complication and confusion for customers who are trying to figure out which airline offers the lowest total price for a given route.

Dynamic prices are nothing new in the travel industry. In fact, prices that rise and fall based on the balance of supply and demand are taken for granted.

What’s new is how these companies are fluctuating the price of the add-on fees many travelers are growing to deplore.

And airlines are increasingly relying on these add-on fees for revenue. In 2023, airlines made a record $117.9 billion worldwide in ancillary fees, according to airline consulting firm IdeaWorksCompany and car rental technology platform CarTrawler. About $33.3 billion of that was baggage fees.

Some industry experts say the move to more fluid fee prices has been a long time coming.

“Airlines have had capabilities for years to price fares based on demand. Why not other fees as well?” says Jay Sorensen, president of IdeaWorksCompany.

What makes a fare fair?

It all comes down to how we think travel companies should price their products. Sorenson thinks we are holding airlines to a standard to which we don’t hold other retailers.

“Shopping for an airline seat is like shopping at a grocery store,” he says. “If the grocery store was required to tell you beforehand how much you were going to spend, it would be ludicrous.”

The base fare is more like the shopping cart into which we toss other add-ons, such as seat assignments, premium seating upgrades and baggage. It’s up to the consumer to compare prices at different airlines, just as it’s on them to compare prices at different grocery stores.

If JetBlue wants to charge more for eggs (baggage) near the holidays, we can decide whether we want to pay the premium or shop with an airline that doesn’t, according to Sorenson.

Tips for navigating fees

It’s not reasonable to keep track of which travel providers are charging which fees at which times.

Instead, it’s worth getting a sense of which airlines tend to charge higher fees overall, and, frankly, avoiding those brands if you want any add-ons at all.

For example, Frontier Airlines charges $157 each way in basic add-on fees while Southwest Airlines charges $0, according to the latest NerdWallet analysis.

So the simplest tip is to fly on Southwest Airlines. It doesn’t have dynamic prices for fees because it has so few fees, period. Two checked bags per person are free.

If that’s not feasible, you might consider getting a co-branded airline credit card, many of which offer free checked bags. Because baggage fees are becoming increasingly complex, this type of credit card lets you avoid the headache of dealing with them altogether, just as paying for Spotify Premium lets you avoid those terrible ads.