Money & Company

Tracking the market and economic trends
that shape your finances.

« Previous Post | Money & Company Home | Next Post »

Carry-on bag fee at Spirit Airlines a success, analyst says

December 25, 2011 |  8:00 am

Spirit Airlines passenger at check-in area

Florida-based Spirit Airlines took a heap of criticism last summer when it announced that it was going to be the first — and so far only — airline to charge passengers up to $45 in extra fees to pack carry-on luggage in its planes’ overhead compartments.

Two federal lawmakers even threatened to impose a tax on all airline revenue generated by such fees, a penalty that has yet to be adopted.

But an industry consultant on airline revenue ideas has declared Spirit’s carry-on baggage fee a major success.

In the 12-month period after Spirit launched the fee in August 2010, the airline flew 24.5% more passengers compared with the same period in 2009, according to a study by Jay Sorensen, president of IdeaWorks, a Wisconsin airline consultant.

Meanwhile, the airline reported a 10% to 12% profit margin in the nine months after the fee was added, a much higher margin than most of its larger competitors, according to the report.

“More than a year later, passenger traffic and revenue results have proven the skeptics wrong,” Sorensen said of the carry-on fee. A spokeswoman for Spirit declined to comment about the report.

Even more important than higher revenues, Sorensen said the carry-on fee has created a cost incentive for passengers to carry fewer bags into the cabin, thus speeding up the boarding process.

"Flight attendants report passenger boarding and unloading occurs far more quickly,” he said in the report. “This preserves Spirit’s desire to keep ground time at a minimum.”

RELATED:

U.S. airlines blast court ruling on European emissions plan

Some flight attendants want '30 Rock' off American Airlines

Demand and fares continue to rise for the nation's airlines

-- Hugo Martin

Photo: Jim Rader rolls his luggage away from the Spirit Airlines ticket counter after checking in for a flight at LaGuardia Airport in New York in February 2010. Credit: Daniel Acker / Bloomberg News

Comments 

Advertisement










Video