How can Allegiant Air justify charging so many fees? Here’s what the company says
10 April 2012
VEGAS INC Coverage
It didn’t take long for public outrage to blow up when news of Allegiant Air’s policy to charge passengers $35 per flight segment for carry-on luggage hit the street.
Minutes after my story was posted online came comments from readers blasting Allegiant for the new fee. Some vowed they would never fly the airline again and would instead take their business to Southwest Airlines.
Good luck with that if you’re trying to get to Fargo, N.D., or Bozeman, Mont. You can fly Southwest to Minneapolis and drive to Fargo or maybe to Boise or Salt Lake City to drive to Bozeman. That would be fun in the middle of winter.
I’m not sure what’s funnier: the fact that people seem to think Southwest is the solution for all air travel or that people were shocked that Allegiant initiated the carry-on fee.
We’ve reported that the Las Vegas-based carrier had been thinking about adding the fee for months.
The reality is that Allegiant’s business model is far different than that of any conventional airline. The fact that it focuses on Small Town USA, is quick to pull the trigger on any route that isn’t making the kind of revenue it anticipated and has a cargo hold full of ancillary fees makes Allegiant unusual.
At the risk of inviting a flood of hate mail to my inbox, it’s important to explain the logic behind the policy. Notice I said “explain,” not defend.
In the years I have covered Allegiant, I’ve asked CEO Maurice Gallagher and President Andrew Levy why they risk irritating the public with more and more fees. Why not just jack up the whole base fare for everybody?
The answer is that they recognize that not all passengers are alike, and they want to give customers a choice to purchase the amenities that are important to them.
To some, it’s important to have a specific seat or section of the plane for their flight. That’s why Allegiant offers to sell the opportunity for a customer to choose a seat.
Some people travel with everything in their wardrobe in their suitcases. Others travel light. Should the passenger who travels light have to pay as much as the passenger with four suitcases and a carry-on piece?
To some, a drink is essential on a flight. In the early days of airline travel, it became an expectation that a passenger would get a free drink. But some don’t care whether they get a drink or not. Again, Allegiant offers a choice.
If you take a look at Allegiant’s base fares, you’ll notice they’re pretty low. That’s because Allegiant knows that the low fare is an incentive to buy and that, in all likelihood, a customer will add some ancillary service that will generate more revenue.
If the company were to increase fares across the board, customers would be less likely to want to buy a ticket. Incidentally, that’s why Allegiant is so aggressively opposed to the recently approved consumer protection measures ordered by the Department of Transportation. Airlines are required to include base fees and taxes and any fee that a customer has to pay in their marketing and advertising messages.
It isn’t a coincidence that the two airlines that have carry-on luggage fees — Allegiant and Florida-based Spirit Airlines — have been the noisiest about opposing those consumer protection rules.
By the way, for all those critics who predict Allegiant will go bankrupt later this year as a result of imposing the new carry-on fee, don’t hold your breath. Company executives have studied the impact of imposing the fee for a long time and know that the revenue it will generate will most likely offset an anticipated decline in passengers that could occur with tickets for the average customer going up $70 round trip.
One thing I wish Allegiant would do voluntarily is to list somewhere on its website a list of how customers could dodge any fee. For example, there’s a fee if you buy your ticket online or through the airline’s call center, but there isn’t if you buy at the airport ticket counter. Consumers should know that.
As for dodging the carry-on fee, a customer could do what travel guru Peter Greenberg of CBS does — ship the things he needs ahead via FedEx or UPS.
You can send a 40-pound box from Las Vegas to Fargo for $40.
That’s cheaper than the combined cost of luggage and carry-on fees on Allegiant.
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