Spirit has taken unbundling to an unacceptable level, say agents

By Gay Nagle Myers and Danny King

Unbundled airline fees have now reached all the way up to the overhead bin, but retail agents aren’t buying it, and they doubt their clients will either.

Click image for larger viewSpirit Airlines last week tried to put a positive spin on charging a fee for carry-ons by touting lower fares in return. But retail agents were not fooled, and a Travel Weekly spot check suggests that on some routes, passengers with just one or two bags would be better off flying the competition. (Click on chart for larger view.)

Spirit, known for rock-bottom fares to domestic sun spots and points in the Caribbean and Latin America, is the first carrier in the U.S. to charge for using the overhead bins, rolling out a $30 fee for each overhead item, for flights departing on Aug. 1 and beyond. Bags that fit under the seat will be carried for free.

Some agents suggested the new fee would trigger a booking backlash.

"We do a fair amount of business with Spirit, but I wouldn’t recommend them now," said Carol McParland of Superior Travel of Orange County in Baldwin, N.Y.

Ricky Ardis, of Ardis Travel in East Rutherford, N.J., views Spirit’s move as an admission that it can’t make a profit otherwise.

"Spirit claims this will speed up the check-in process," Ardis said. "It’s just the latest in the unbundling frenzy. All we want is that the airlines be honest with us."

Alluding to Irish low-cost carrier Ryanair’s proposal to introduce pay toilets, Ardis added, "Spirit is the Ryanair of the U.S." If Spirit were to do away with the checked-baggage fees and charge only for carry-on bags, Ardis said, "I wouldn’t mind it."

Although Spirit serves Chicago O’Hare, Anthony Tozzi of Travel 4 Seasons in Des Plaines, Ill., said he does little business with the carrier, "and I don’t plan on doing any at all now."

Spirit’s new fee also irks Kathleen Walden at On Track Travel in Massapequa, N.Y. "I hate it," she said. "It’s very hard to explain to clients."

David Gedansky of Travel Leaders, Pembroke Pines, Fla., said, "I haven’t sold Spirit tickets because of the fees that already were in place before these latest charges." He predicted that controlling the carry-on items and collecting the charges "will be a mess."

"The airline says that passengers can carry on a backpack if it fits under the seat," he said. "But what if someone throws their backpack into an overhead bin? Will flight attendants have to go up and down the aisle questioning whose backpack it is and then try to collect a fee from that passenger?"

Jim Hobbs, founder of CheapCaribbean.com, was "saddened" by Spirit’s move.

"Unfortunately, we can’t control how airlines charge fees to our customers," Hobbs said. "We’ve informed our more than 100 [res agents] to advise customers when making reservations about Spirit’s new fees."

Spirit, he said, represents "a very small percentage of our package business. With the announcement of these additional fees, I would suspect our bookings with Spirit will decrease moving forward."

Victor Jourban, Quality Travel Services in McLean, Va., was succinct: "I think it’s garbage," he said.

"The direction that airlines are taking regarding fees, marketing strategies and the use of frequent-flyer miles is obnoxious and a scam. If airlines weren’t so powerful a lobby, the government would come down on them for misleading the public."

The prospect of consumer confusion was also of concern to Jack Gillis, director of public affairs at the Washington-based Consumer Federation of America.

"This a la carte pricing is making it very difficult for consumers to comparison shop," Gillis said. "Clearly, the airline industry is still struggling to figure out how to price its products in a competitive fashion."

Indeed, for travelers on the East Coast looking to make long-weekend excursions to Miami, Myrtle Beach, S.C., or the Bahamas toward the end of summer, Spirit’s base fares for the most part are lower than those of Delta, American and even JetBlue. But they leapfrog many of the other carriers’ fares once baggage fees are added in.

Still, by pitching the concept of keeping prices low through unbundling, closely held Spirit might be able to keep and possibly expand its passenger base, said Robert Poole, director of transportation policy at Los Angeles-based research firm Reason Foundation.

"For Spirit’s low-fare/leisure traveler market niche, this further unbundling might work," Poole said, alluding to the success of low-price competitor Allegiant. "It all comes down to how persuasively they can pitch it."

Additionally, Spirit’s smaller size relative to carriers such as American, United and Delta might make it easier for the carrier to implement the carry-on charges, because such a policy is likely to require more policing and management of overhead bin space on the part of flight attendants, said PhoCusWright analyst Douglas Quinby.

"Operationally, it is probably not as big a challenge for them as it might be for larger airlines," Quinby said, adding that a larger airline seeking extra revenue would be better off pitching services like WiFi and premium meals.

"For most airlines, this would be a strategic misstep," Quinby said.

And even for Spirit, the negative reaction from agents suggests the strategy could backfire, especially when considering Southwest’s apparently successful campaign to position itself as the airline on which bags fly free.

While Southwest, whose 2009 revenue was $10.4 billion, might be leaving as much as $500 million on the table by not charging for first or second checked bags, the carrier might also pull as much as $800 million in sales from carriers who are charging, said Vaughn Cordle, chief analyst at Washington-based research firm AirlineForecasts.

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