Nickels and Dimes

April 22, 2010

I just booked a flight to Chicago, thanks to Spirit Airlines. I didn’t plan to book it, but realized I should while perusing Spirit’s website after reading about its impending carry-on baggage fees.

I have seen few price changes incense people as much as airline fees do, and the recent coverage was abundant. Michelle Singletary’s “The Color of Money” column, The Washington Post, 4/18/10, characterizes the fees as customer “mistreatment.” Jeff Jacoby’s Boston Globe Column, 4/18/10, reminds us that we operate in a free-market system. Announcements that major airlines won’t adopt the overhead baggage fees gave us a collective sigh of relief.

Despite their differing headlines, both columnists acknowledge that customers will end up voting with their feet, which is the beauty of the free-market system. Clearly, industries that receive consumers’ discretionary dollars have felt the pain of customers opting out either completely, or for substitutes – it’s hard to have missed that for the past year and a half.

Just the other night, a friend noted during a dinner out that she sees more upcharges for extras lately – in this case, guacamole for $.75 at a local Tex Mex dive. I didn’t mention that the restaurant has always done this as it didn’t seem to matter – but as a non-guacamole fan, I’ve often noted at this establishment that my taste buds saved me a bit of money. But for those who consider guacamole a necessary fajita condiment, it’s a slight annoyance. Lucky for them, we’re only talking $.75, and not $45.00 for a suitcase.

I’m sure Spirit suffers more backlash given its industry – as if flying weren’t already distasteful enough, here is one more reason for consumers to resent flying. While Spirit runs few routes from Boston, I’ll assume it’s a fine airline that enjoys good customer perceptions. And as Jacoby points out, Spirit positions itself on this very principle as an “ultra-low cost carrier.”

Customers are often attracted to the “free” label – that “free internet” at your hotel? The “free shipping” from Zappos? I think you all know how these are handled – but boy do people love this anyway – that’s great marketing, all right. There’s something to be said for the all-inclusive pricing model.

So I look forward to watching what happens with Spirit – whether or not they keep the policy, how it impacts revenue and profit. And I wonder if other airlines will refrain from those fees, or add them, or find other services to unbundle from our fares.

Incidentally, Spirit could get me from Boston to O’Hare for $313, connecting in Myrtle Beach. With or without a baggage fee, this just doesn’t make sense, so I stuck with American’s direct flight for $230 (for me and my bag). However, Spirit can fly me from Boston to Fort Lauderdale for $251 roundtrip, on nonstop flights. Having recently paid slightly over $300 (plus $12 for the privilege of seat selection) for a trip to Florida, I know that if I booked Spirit’s $251 fare and paid a baggage fee, I still be receiving the lowest-cost option. But I’d probably feel better about a slightly higher, all-inclusive fare. If Spirit really is the king of unbundling, though, I doubt that’s in the cards. Additional fare searches confirmed that even with baggage fees, Spirit would still be the lowest-cost option. So it’s really just six of one, half dozen of the other, and a lot of buzz in the news from the announcement. And as I’ve experienced, there is no such thing as bad PR. So good for Spirit – I think they just got a lot of “free” advertising.

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One Response to “Nickels and Dimes”

  1. Alison Kovaleski Says:

    Leslie,
    I love your take on this. Thanks for some great comments!
    Alison


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