Infants on a plane – a good example of externalities at work

Being a new parent is continuously opening my eyes to aspects of life that had been hidden from me so far. Travelling with an infant is one of them. One of the joys of parenthood is trying to organise a trip for the whole family, not only it is impossible to please everyone but leaves considerable dents on our family budget. And seemingly it is somewhat even worse than I had previously thought. It seems that despite my previous beliefs airlines now charge an infant fee for any child between 0-2 years of age. I’ve checked five airlines, including budget and traditional carriers, and found the infant fee to vary between £20-40 per infant per route. The fee is so high in some cases that it would be cheaper to just buy a separate ticket for the baby and then get the extra luggage allowance that comes with it.

Scarily, I have no idea why they impose this fee. I don’t think space is the issue as the infant does not require an extra seat and is usually smaller then my laptop case, which I can carry free of charge. The best explanation I could come up with is that airlines consider baby-related nuisances an externality on other passengers. If a baby screams through the whole journey that’s clearly a cost for all fellow passengers – at least in an economic sense. So to ‘internalise’ these externalities airlines now charge a fee. As a result they expect smaller demand for infant travelling (as costs have now increased) and if this happens then a subsequent increase in demand from infant-averse travellers (as their costs now includes less baby screaming). All makes sense…

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