Ultra Trouble for the Ultra Low Cost Airline?

Last week Spirit Airlines announced that it would start charging fees for carry-on bags this summer. Spirit described the benefits of this move as follows:

“In addition to lowering fares even further, this will reduce the number of carry-on bags, which will improve inflight safety and efficiency by speeding up the boarding and deplaning process, all of which ultimately improve the overall customer experience,” says Spirit’s Chief Operating Officer Ken McKenzie.  “Bring less; pay less.  It’s simple.”

As I’ve noted in previous posts, carry-on bags have become a problem on many flights. With advances in roll-aboard technology and in the face of new fees for checked luggage, more passengers are bringing baggage on board, sometimes overwhelming the capacity of the overheads. Airlines need to find a solution to that problem. Spirit’s fees are one possible answer.

I’m sure Spirit expected that some passengers and passenger advocates would object to these fees. I wonder, however, whether the airline ever suspected that it would incur the wrath of Washington?

Over the weekend, New York Senator Chuck Schumer denounced the proposed fees and sent a letter to Treasury Secretary Tim Geithner asking that he stop them. He’s also threatening legislation to prohibit them.

If you are like me, your first reaction should be to wonder why the Treasury Secretary–rather than, say, the Transportation Secretary–is the lucky recipient of Schumer’s letter. This being the middle of April, however, the answer shouldn’t surprise you: taxes,  specifically the taxes that are levied on airline tickets (but not on some other fees associated with flying). The narrow issue is whether the carry-on fees should be subject to the tax. The broader issue is whether carry-on fees should be allowed separate from the ticket price.

Meanwhile, the Transportation Secretary, Ray LaHood, wasted no time in denouncing the proposed fees as well, saying:

I think it’s a bit outrageous that an airline is going to charge someone to carry on a bag and put it in the overhead. And I’ve told our people to try and figure out a way to mitigate that. I think it’s ridiculous.

So watch out Spirit Airlines; your experiment in pricing scarce overhead capacity may not be welcome in Washington, even if it does lead to lower fares and faster boarding.

P.S. The tempest over the baggage fees is temporarily overshadowing a much more interesting and important issue: the transparency and intelligibility of airline fees. Secretary LaHood touches on this in the interview linked to above, as does this article over at Philly.com’s Philadelphia Business Today. Given the panoply of fees and taxes on air travel–thanks both to the government and to the airlines–there’s a real question about whether consumers understand the full costs of flying when they make their purchasing decisions. And some airlines–most notably Spirit with its “penny” and “$9” fares–seem to be playing on that.

10 thoughts on “Ultra Trouble for the Ultra Low Cost Airline?”

  1. Hey! Gratis for the Blog post! I’m finding it very fascinating. I’m going to bookmark this blog and return. can you tell me where i can find more information on this? Keep up the great work, have a great day!

  2. In the soundbite I heard, Schumer offered essentially two reasons for his opposition to these fees: (1) These fees are exploitative, and (2) they constitute deceptive (or at least unfairly opaque) business practices, since ticket purchases are unaware of them at time of purchase.

    #1 seems ridiculous to me, unless he wants to go back to regulated pricing / price controls. We have a competitive marketplace, and competitors can and should be able to price at whatever level and per whatever structure they wish, and consumers can choose among them.

    #2, if the premise is valid, seems legitimate, but the solution is to ensure transparency, not to tell airlines they can’t charge these fees.

    So it seems to me that Schumer, for whatever reason (I assumed it was just to score cheap political points, but perhaps there is also a tax revenue motivation), is conflating #1 and #2 into some kind of mush that gives people the sense that he’s stopping some inappropriate practice.

  3. I agree that this seems pretty small ball for congress. I am however, glad that an airline has noticed that charging for checked- not carry on- luggage has caused a huge mess on the flights and makes boarding a nightmare. I travel a lot for work and usually carry on because my trips are 2-3 days. I think avoiding having to wait 30 minutes for my bags to arrive is worth the money, but to pay to wait seems ridiculous.

  4. As one who travels on the airlines a lot, one of the biggest gripes is people and their carry on luggage. The situation of people standing in the way trying to cram an over sized traveling case into an overhead bin or moving against the flow of people coming in to try and find a space becasue the overhead in their immediate area is full really increases the time it takes to board and or unload. It is much worse since the airlines started charging for checking one’s suitcase.

    Yes, its a probelm that the airlines need to address, but how an airline runs its internal business affairs is certainly should not be a concern of the Federal Government. They have their darn nose stuck into way to many things already. So what’s next, the government requiring certain people to sit in certain areas of a plane, or requiring the airlines to have a special kind of seat to accomodate different types of body styles, et cetera.

    Enough is enough. The Federal Government is already to big and bossy. Time to tell them to keep thier hands off the internal operations of the airlines. Write, e mail or call your congressman or Senator and tell them to keep their nose out of where it doesn’t belong.

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