In spite of baggage fees and rising oil prices, air travel is actually cheaper overall than it was in the past, according to this chart by Mark J. Perry of American Enterprise Institute, a conservative think tank. Using data from trade group Airlines for America, Perry looked at the average cost of a round-trip domestic flight in 2011 dollars. The blue line for fees represents baggage and reservation change fees.
As you you can see, even with extra fees, the cost of flying has gone down. Not that fees aren't contributing to the cost; they now make up a bigger portion of the overall cost of flying than they did in the past, as evidenced by that widening gap between the red and blue lines. Even with those fees, the overall cost of flying is lower than years ago. That said, flights no longer have the same features they used to (high class service or free meals, for example), so the way people fly is different. And don't even get us started on airport security.
AEI is conservative, so it's not surprising that Perry credits the 1979 government deregulation of the industry for decreasing prices. "Overall, consumers have reaped significant benefits from the deregulation of airlines in 1979, and have saved billions of dollars in lower fares," Perry writes. "Like any industry, the airline industry is evolving over time, and consumers have to adjust to the changes."