Browsing Tag: Fees

Allegiant MD-80 and Spirit Airbus A319 hanging out in Las Vegas. Photo by Joe (JX).

Allegiant MD-80 and Spirit Airbus A319 hanging out in Las Vegas. Photo by Joe (JX).

With Spirit Airlines raising their carry-on fee at the gate to $100 ($35 if you pay ahead of time after November 6th) and Allegiant Air starting to charge for their carry-ons, it has a bunch of people very upset. But why? If an airline comes out with a policy you do not agree on, do not fly them. They will get the message and either change their policies or go out of business. Even though people state they won’t fly either airline, both Allegiant and Spirit continue to grow, so why would they want to reverse their fees?

Yes, I realize that some passengers do not have many choices at their closest airport. However, there is a reason why other airlines are not able or willing to fly into those airports — they can’t make it profitable. So, you are either stuck with an airline that charges fees, one that runs turbo-props or you  take the bus.

What interests me are the people that do have a choice, complain about fees, yet continually choose either of the two ultra low-cost carriers.

Being human, most people want their cake and eat it too. Passengers want a first class experience at an ultra low-cost carrier price. Sorry to break it to you — that is not going to happen.

When asked how Spirit Airlines views its fees, Misty Pinson, Director of Spirit Communications, told AirlineReporter.com, “Our ultra low fares with optional add-ons are very consumer friendly. We give customers the opportunity to save money with our low fares and give them the power to choose the extras they want, and they only pay for those they use rather than being forced into paying a higher fare that includes extras that they don’t even want or use.”

Some of you might be rolling your eyes thinking that Spirit is just spinning the fees as a good thing, but Pinson actually gives some good points. If I fly on another airline that might not have as many fees, but I don’t want a soda, I don’t have a bag to check and I am not interested in food, I am still paying for all of those things in my ticket price. Yet airlines, like Spirit, give you the option to pay less overall, if you are not going to use all the options. How is that unfair? Especially when you do all all the fees to the base fare, the overall price still comes under most other airlines.

I also reached out to Allegiant to check in on charging for carry-on bags is going. “Inevitably, when you start to charge for something that used to be free, there will be some people who are vocal about it, but ultimately, we have seen that only about a third of our customers are purchasing overhead bin space when they make their travel reservations online,” Allegiant spokesperson explained over email. “As we unbundle our product and drive down base fares, we are able to stimulate demand and see growth in the number of people who can afford to travel.”

Let’s take a closer look at how both airlines have been doing; comparing the first quarter of 2011 to 2012, both airlines did very well (all data from SEC):

ALLEGIANT
Revenue Passenger Miles (RPM) are up 17.2%
Passenger revenue is up 25.8%
Average fare is up 6.7% to $94.95
Average fare (ancillary revenue) is up 4.2% to $37.75

SPIRIT
RPMs are up 18.8%
Passenger revenue is up 17.5%
Average fare per passenger flight segment is down 6.9% to $76.65
Non-ticket revenue per passenger flight segment is up 21.3% to $51.68

That 6.9% decrease is important to note. It indicates that the people who don’t buy anything else are getting a better deal on Spirit flights.

If you were an airline and  wanted to make profit (when it comes down to it, that is what every airline wants right?) and you have this business model that makes you profit, while you continue to grow your passenger load, why wouldn’t you do it? There is obviously enough demand for airlines like Allegiant and Spirit to exist with other  domestic carriers Southwest, Alaska and Virgin America as well.

Many feel that ultra low-cost carriers have started a race to the bottom for overall experience. I disagree. They have provided a cheaper option for people who care more about getting from point A to point B as cheaply as possible than they do about amenities. If you want to ride in style, you can still pay more to fly in first class on another airline, not have to pay any fees, get more room and even a meal. The “golden-age” style of flying still exists, but it will just cost you much more (like it did in the “good ol days”).

If you are still angry about all those airline fees, it is okay to be angry — just don’t blame the airlines. If you are going to blame anyone, blame those passengers who see them as a better overall deal and create the demand for airlines like Allegiant and Spirit to come along and fill.

Alright, let’s hear it… what do you think of these new/higher airline fees?

A huge thanks to Dan Webb for helping me with these numbers and to Joe (JX) for letting me use his photo.

It will cost you more to bring your carry-ons on your next Allegiant flight. Photo by Jeremy Dwyer-Lindgren.

It will cost you more to bring your carry-ons on your next Allegiant flight. Photo by Jeremy Dwyer-Lindgren.

Allegiant Air has stated that they will start charging for carry-on bags starting Wednesday, April 4th — and no, this is not an April Fools’ joke.

“Allegiant will begin charging for carry-ons for travelers booking new reservations beginning Wednesday (it will go live on our website late Tuesday night PDT),” Jessica Wheeler, Public Relations Manager for Allegiant confirmed to AirlineReporter.com.

Although the airline has not publicly announced the changes, they sent an internal memo to employes. Passengers will be allowed one free personal item (purse, briefcase, laptop), but anything larger will require the carry-on bag fee. Paying for the carry-on at the airport will run you $35, but buying online will save you some money. Allegiant has not confirmed how much the fee will cost if purchased in advance, but inside sources have explained that they expect it to be between $14.99-29.99 — which matches Allegiant’s checked bag fees. The difference in price is route specific and depends on the length of the flight flown.

From Allegiant, this shows how much your bags will cost on upcoming flights.

From Allegiant, this shows how much your bags will cost on upcoming flights. Yes, it is a bit blurry -- you don't need glasses. Image from Allegiant.

This is not a huge surprise, since Allegiant has previously stated that they were considering charging for carry-ons. With the success of Spirit Airline’s carry on fees (Spirit s the only other US-based airline charging for carry-ons), this seemed to be just a matter of time.

Allegiant, based in Las Vegas, is an ultra low cost airline that offers cheap, basic fares and then charge for additional services like seat reservations, boarding order, food and drinks and now carry-ons. This type of ala-cart pricing has been quite controversial, but does allow people traveling light, to travel cheap.

The model of ala-cart pricing and providing additional travel options (hotel, rental cars, etc) has worked out well for Allegiant — they were one of the most profitable airlines in 2011.

Passengers seem to complain about this type of pricing, yet they keep buying tickets. Why wouldn’t airlines look at additional revenue sources like this when they appear to work? If you don’t agree with an airline’s policies, show them with your wallet. Let the complaining begin…

Allegiant Air MD-83 (N865GA) at LAX

Allegiant Air MD-83 (N865GA) at LAX

Allegiant Air has announced they are looking into the possibility of charging passengers a carry-on baggage fee. As reported by AviationWeek, Allegiant Air President Andrew Levy stated the carry-on baggage fees are “intriguing,” during a  presentation at the Low-Cost Airlines World Americas conference on May 3rd.

Currently, Spirit Airlines is the only US-based airline that charges for carry-on bags. They too are an ultra low cost carrier and first received a lot of flack when they announced the new fees. However, it doesn’t seem to bother travelers enough, since the airline has continued to make additional profit on the fees. For the first quarter of 2011, Spirit doubled their bag fee revenue compared to first quarter 2010 and average non-ticket revenue per passenger increased by 37.9%.

Remember, weight costs money. The more an airplane and its contents weighs, the more fuel (and money) it takes to fly. It might anger most people thinking about paying another fee, but why should someone with no luggage pay for someone with luggage? More importantly, why would airlines turn down this revenue maker? Charging for carry-ons doesn’t cause health concerns or kill anyone, so why do passengers keep acting like it is the end of the world to charge for carry-ons?

When asked what Allegiant’s future plans are for charging a carry-on bag fee, Jordan McGee Director of Allegian Corporate Communications explained, “It’s really too premature to provide any further info on potential charges for carry-ons.” However, she confirmed that Allegiant is, “considering it.”

For me, this is not a huge surprise and I have been waiting for Allegiant to announce such a fee. Allegiant’s model of providing cheap prices, with fees for everything beyond getting you from point A to B seems to welcome a new fee like this. You better believe other airlines are watching how Spirit and Allegiant are doing with carry-on fees and it might not just be ultra low cost carriers having them in the too near distant future.

Image: Brandon Farris

Model of an Allegiant Boeing 757 located behind Allegiant CEO's cubicle at their headquarters in Las Vegas.

Model of an Allegiant Boeing 757 located behind Allegiant CEO's cubicle at their headquarters in Las Vegas.

Dan Webb on his blog, Things in the Sky, wrote up a story about Allegiant looking to possibly offer a new type of fare that changes with the cost of fuel.

In a filing to the Department of Transportation, Allegiant wants to have the option of offering a fare that could fluctuate based on the price of oil. This would mean you could buy a ticket for uber cheap now and then possibly have to pay more later if the price of oil goes up. This fare option would be in addition to their regular fares.

Is this crazy? Maybe, but again maybe not. Determining the price of fuel is a huge part of running an airline. Passengers will purchase tickets months in advance (especially leisure fliers, that Allegiant caters to) and there is no telling what the price of fuel will be when the flight actually happens. If airlines charge too little for tickets, they could end up losing money for that flight.

This new fare options, allows passengers to gamble on their airfare, which makes sense for the Las Vegas based airline. The big problem is, are most passengers savvy enough to understand the fuel-fare? And who would regulate that Allegiant would be raising fares properly based on fuel costs?

This could be taking the ala cart airline fees to the next level. Brett Snyder via BNET recently took a look how the traditional low cost carriers are growing and becoming more traditional. This leaves room for airlines like Allegiant to come up with creative ideas on how to add additional fees and revenue. People complained loudly when Spirit announced carry-on fees, but their low fares and fees have been very successful for them. Passengers seem to complain, but when faced with the option, they love the low fares and fees.

Even when I flew Allegiant, I got a bit overwhelmed by all the fees, but I flew for much cheaper than on any other airline — by quite a bit. Could fuel price-sharing be the future of ultra low cost carriers? Who knows, but Allegiant wants to be prepared if it is.

To see quotes from Allegiant and Southwest Airlines on this issue, check out my story on AOL Travel News.