EasyJet’s chief executive has argued that European Union baggage regulations would create resource allocation inefficiencies across the aviation system.
Proposed legislation would mandate free cabin baggage across European aviation. European legislators voted decisively to support regulations requiring airlines to provide allowances for both personal items and larger carry-on bags.
Kenton Jarvis explains that market-based pricing creates efficient resource allocation by matching supply with demand. Passengers who value baggage services reveal their preferences through willingness to pay, guiding optimal resource deployment.
Regulatory mandates that override price signals reduce allocation efficiency and create waste. Resources get deployed based on political requirements rather than actual passenger preferences and economic value.
The airline generates billions annually from ancillary services that facilitate efficient allocation. EasyJet reported quarterly losses of £93 million while optimizing resource deployment and seeing encouraging momentum in booking volumes.