The Fare Was Never the Price

The complaint is universal and slightly wrong. Flying, people say, has become a nickel-and-dime exercise in which the advertised fare is a fiction and the real price only appears after four screens of upsells. All of that is true. What the complaint usually gets wrong is the conclusion: that unbundling made flying more expensive. In inflation-adjusted terms it did the opposite, and understanding why is the only way to stop losing money to it.

What unbundling actually did

A traditional fare was a bundle: seat, checked bag, cabin bag, seat assignment, a meal, a change fee somewhere in the middle. Everyone paid for all of it, including the passenger flying hand-luggage-only to a meeting and back. Unbundling broke the bundle into separately priced parts, and the low-cost carriers that pioneered it used the savings to attack the headline number — because the headline number is what the search engine sorts on, and the search engine is where the customer is.

That is the whole mechanism. Nearly every fare display sorts on the headline price — the exceptions are the regulated markets that force the unavoidable charges into it, and they are exceptions. A carrier that moves a cost out of the base fare and into an ancillary rises up the list, and rising up the list is worth more than the margin on the item moved. The result is a market where the cheapest-looking fare is systematically the one with the most stripped out, and where the airline that bundles honestly is punished for it.

It is worth being clear that the passenger who wanted the unbundled product genuinely won. Someone flying two hundred kilometres with a rucksack, who does not want a meal and does not care which seat, now pays a fare that would have been impossible under the old model, because they are no longer cross-subsidising a family of four with three suitcases. Unbundling is a transfer from heavy users to light ones, and most objections to it come from the heavy end.

Nobody unbundled to raise prices. They unbundled to win a sort order, and the sort order is what the passenger actually shops on.

Where it becomes a trap

The problem is not the existence of ancillaries. It is that their prices are set to punish decisions made late. A checked bag added at booking, at online check-in and at the airport desk can differ by a factor of three or four, and the gate price for an oversized cabin bag is deliberately punitive — it is not a fee for a service, it is a fine for a behaviour the airline wants to stop. The same logic governs seat assignment: the charge exists partly to sell seats and partly to make the free allocation unattractive enough that families will pay to sit together.

That last practice has attracted regulatory attention in several markets, on the reasonable ground that separating a small child from a parent is not a service the airline should be able to charge to undo. Some carriers now seat minors with an adult automatically. Others do so only if you ask, at the airport, after the algorithm has already scattered the party across four rows.

The second trap is comparison. Once fares are unbundled differently by every carrier, the search result is no longer comparing like with like. A fare that includes a 23 kg bag and a fare that includes nothing are shown as two numbers on the same list, and the traveller does the reconciliation in their head, badly. Regulators have circled this for years — some markets now require the total including unavoidable charges — but nothing yet forces a comparison at equal service, which is the only thing that would fix it.

The change-fee shift

The most interesting recent movement runs the other way. Change fees, once a substantial ancillary, have been withdrawn on many fare types by major carriers, and the reason is not generosity: they were replaced by fare-class differentiation, where the cheapest bucket simply cannot be changed at all and the changeable one costs more up front. The revenue moved from a penalty at the point of change to a premium at the point of sale, which is better for the airline’s forecasting and worse for anyone who assumed flexibility was still purchasable later.

How to fly the system

Decide your baggage before you open a search, then price every option at that specification. Buy ancillaries at booking, never at the airport. Treat any fare where the bag costs more than the seat as what it is — a bus fare with an aircraft attached — and price it against the alternative that includes the bag rather than against its own headline. And read the cabin-bag dimensions rather than assuming: the difference between the free personal item and the paid cabin bag is where most of the money in short-haul now sits, and the sizers at the gate are enforced far more strictly than they were five years ago.

For a family, price seat assignment as a mandatory cost rather than an optional one, because in practice it is. For anyone with a connection on a separate ticket, price the risk as well: an unbundled fare has no protection when the first leg is late, and the replacement is a walk-up fare. And check whether the fare you are buying earns anything, since the cheapest bucket on many carriers now accrues nothing at all.

None of this is a scandal. It is a market doing exactly what its interface rewards. But it does mean that the skill of buying a flight is no longer finding a low number — it is reconstructing the bundle you actually need and pricing that.