Air New Zealand does this also, as does Aer Lingus.
I’ve used the system a couple of times in NZ and once in Eire. Domestic use in NZ was ok, I managed to tag my bags without a hitch, flying AKL – BNE was a different matter. Not sure what went wrong, but I had to go and find someone to help me as at that point I was the travelling equivalent of a turtle on its back.
Aer Lingus was a-ok and tagged without a hitch. I understand why they are doing it, but it all seems a bit LCC (which Aer Lingus is these days), but Air New Zealand and KLM, I would have thought wouldn’t neccesarily take this route.