Yesterday's Wall Street Journal Middle Seat column by Scott McCarthy had a tidy summary of carriers' strategies to reduce fares by charging extra for various services. You know, checked baggage fees, fees for more legroom, etc.
There's an analogy in there attributed to the CEO of Spirit Airlines B. Ben Baldanza, who notes that such fees are NOT "Nickel and Diming" as some consumers claim, but rather on par with movie theatres that sell you a ticket and then gouge you at the concession stand.
As Tyler Durden once asked, "How's that working out for you? Being clever?".
Interestingly, Baldanza tells us.
Per the article, Spirit's average one-way fare is $100 yet the carrier collects another $15 per passenger via "Non Nickel and Diming" We must say, 15% seems like a pretty good premium. However, note per our post below that Continental Airlines is collecting at least $125 per one-way (based on $250 per round trip) on comparable leisure sales vs. Spirit's $115.
Whoa, so Continental is doing 8%+ better on revenue than Spirit using good old fashioned airline gimmicks like free warm soda, a strong network, and a loyalty plan.
Baldanza says, "you either need to compete on price or compete on product. You can't do both." However, we wonder if Spirit is really saving enough by checking a few less bags to compete with low fares. How much does it cost Spirit to become a flying minimart selling newspapers, magazines, and aspirin?
Note to Spirit passengers - sneak some Junior Mints onboard in your baggage. It works at the movie theatre, doesn't it?
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