Spirit Airlines to charge for carry-on bags to pull down fares
NEW YORK (MarketWatch) -- In a bold move, low-cost carrier Spirit Airlines said Tuesday it would be the first carrier to charge for carry-on luggage, the latest step in de-bundling products and services traditionally included in the price of a ticket.
The Miramar, Fla., airline said the new policy would help reduce its fares further. The company also raised its fee for a second check-on bag.
"Bring less; pay less. It's simple," said Chief Operating Officer Ken McKenzie in a statement.
For flights on or after August 1, Spirit said it will charge passengers $45 for a carry-on bag, or $30 if they register the bag ahead of time either on line or on the phone. Members of the airline's $9 Club Fare will be charged $20.
Passengers are allowed just one carry-on bag.
Spirit raised its second check-bag fee to $45 from $25 when checked in at the airport. The first check-bag fee is held at $25.
"The real question is will other airlines follow," said Airfarewatchdog.com founder George Hobica.
Major legacy carriers such as American parent AMR Corp. /quotes/comstock/13*!amr/quotes/nls/amr (AMR 8.79, -0.06, -0.65%) and Delta Air Lines /quotes/comstock/13*!dal/quotes/nls/dal (DAL 14.51, +0.09, +0.62%) are likely watching customer reaction. Legacy carriers could likely add such a fee on their domestic routes while excluding their frequent-flier members, which represent the bulk of their core revenue.
Since 2008, airlines have been adding checked-on baggage fees to offset higher fuel costs and declining ticket sales.
For the third quarter, the latest data available, revenue from checked-on baggage fees exceeded $700 million, up 11% form the year-ago period, according to US Bureau of Transportation Statistics.
In the same time period, average fares fell 14.4%.
"The other question is when will more shoes drop," Hobica added, referring to the need of carriers to increase revenue further in a industry that's projected to post a loss for the third year in a row.
Airlines could still charge customers for using a credit or debit cards, or eliminate airport check-in counter staff completely, with passengers instead showing up at the airport with a printed boarding pass and paid luggage already paid for.
http://www.marketwatch.com/story/spirit-airlines-to-charge-for-carry-on-bags-2010-04-06