Spirit Airlines CEO, Ben Baldanza, defended the carrier’s decision to charge for carry-on baggage, stating the charge will eliminate delays as the carrier "identified excessive carry-on baggage as the number one controllable reason that our planes were being delayed at the gate" (Seattlepi.com, 11-Apr-2010). US Department of Transportation Secretary, Ray LaHood, called the Spirit decision as "outrageous" and "ridiculous", adding "I don’t think they care about their customers". Meanwhile, New York Senator, Charles Schumer, reportedly called on Treasury Scretary, Timothy Geithner, to reverse recent legislation allowing Spirit to keep the carry-on baggage charge tax free (The Consumerist, 12-Apr-2010).
Spirit Airlines CEO defends decision to charge carry-on fees
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US airlines Part 2: LCCs and ULCCs face the same cost overhang as their larger rivals
US low cost carriers and ULCCs observed many of the same trends in the country’s marketplace at the end of 2016 as their large global network rivals – namely, that weak pricing trends in the domestic market were improving. Each airline has its own nuanced view of that general operating environment, but they feel encouraged by what they hope is an inflection point in pricing that will lay the groundwork for a return to positive unit revenue.
Those lower cost and ultra-low cost airlines also face similar challenges to their larger counterparts – cost pressure from new labour contracts and rising oil prices. And like their larger rivals, most of the lower cost US airlines are plotting lower capacity growth in 2017 as a means to improve their respective revenue performances.
For now, pricing improvement that began in late 3Q2016 and a bump in demand after the US presidential election are sustaining the cautious optimism expressed by US airlines as 2017 gets under way. But no US airline is ready to declare that pricing traction in the country’s domestic market is on a sustained upswing.
This is Part 2 of two reports examining the outlook for US airlines in 2017.
Optimism, uncertainty and cost pressures offer an unpredictable mix for 2017
A sense of optimism prevailed among North American airlines as 2016 draws to a close. It is driven by the beginning of stabilised pricing in the US domestic market and an improved outlook for Western Canada after a marked drop in oil prices triggered a collapse in demand.