Spirit’s Baldanza: “The basis for this new fee was founded in improved customer service”

By | April 9th, 2010

Earlier this week, Spirit Airlines announced it would begin charging for carry-on luggage. That drew criticism from the Secretary of Transportation, who I interviewed on Wednesday. I wanted to give Ben Baldanza, Spirit’s chief executive, an opportunity to respond — and to explain the rationale behind charging for carry-on bags. Here’s our interview:

Why did you decide to start charging for carry-on luggage?

Last fall, we identified excessive carry-on baggage as the number-one controllable reason that our planes were being delayed at the gate. We challenged ourselves to eliminate these delays without raising customer prices or Spirit’s costs, and to make the boarding process quicker and easier for our customers.

What are the benefits to the consumer of paying for carry-on luggage?

Our answer to the challenge came in the form of a three part solution:

Number one, add a carry-on bag fee, and reduce the checked-bag fee, to neutralize the current incentive to avoid checked baggage. But by all means keep personal items free.

Number two, lower base fares by the amount of the carry-on fee or more, so that customers who continue to carry-on still pay no more for their travel in total.

Number three, offer first boarding to customers with carry-on bags, to help ensure that they will find ample overhead bin space right above their seat.

This also ensures that the last people on the plane won’t delay things by looking for space for their bag, since by definition that will not have a bag that doesn’t fit under the seat in front of them.

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So these are the benefits to the consumer. No one pays more, some pay less, and those with carry-on bags get to board first.

But $45 for a bag? Isn’t that a little high?

It sure is, and that’s why no one has to pay it! Our carry-on fee is $20 or $30, depending on if you’re a member of our “$9 Fare Club.”

The $45 fee will only be charged to customers who fail to buy their bag online, at a kiosk, or at the ticket counter. If choose not to pay for the bag at any of these earlier points, they force us to handle the transaction at the gate. Because gate delays are what we are trying to eliminate, we’ve priced it to discourage this behavior.

Spirit also said it would begin offering one cent fares. I can’t think of anyone who wouldn’t want to book a penny fare. But as you pointed out in your announcement, other fees will apply. How do you plan to disclose those fees?

We offered “Penny Plus” fares and clarified that to mean “One Cent plus Fuel, Taxes, and Fees”. Several months ago, Spirit started allowing customers to see how much of their ticket price was covering the fuel costs for their seat, something no other airline does today.

But no one has to buy a ticket without knowing the required fuel, tax, and fee components, as at the time they make the purchase decision these are all fully disclosed. In fact, we don’t even break out the fuel portion today, though we plan to do so in the future.

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  • JP

    Flying Spirit airlines was a horrible experience. It was my first and my last time. By the time we payed for bags and for the privilege of sitting next to my spouse, it was the same price as flying on Delta. Then, even though we made our reservations months in advance, the agent gave our exit row seats to someone he knew and bumped us (we watched the action from the waiting area) and we had to pitch a real fit to get our money back for the upfront reservations we paid for the seat. Don’t be fooled by this guys ‘aw shucks’ demeanor. It is a terrible airline with less than stellar employees.

  • I like how he manages to spin it all as customer service when they know that it will be near impossible for people to track if their fares actually do go down. If they go up, they can just say it’s because of supply and demand and people still have to pay for anything larger than a personal item.