This happens every day to me on the Toronto subway, bus, or streetcar.
There's a Youtube video gone viral of a woman on a Toronto subway taking care of this matter in an aggressive way, by sitting on the person's bag. Of course it gets heated after that....who needs that. I don't. 100% of the time - at least here in Toronto - when I've asked NICELY if I could sit down where the offending bag is, I've been met with a proper reaction. The bag is quickly removed, I say Thank You, and who knows....maybe that person will think a little bit more next time. No hard feelings, and both I and bag person carry on with our days without the thorn in our minds of having had an ugly interaction with a person.