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Spirit Airlines announced yesterday that they will begin charging passengers as much as $45 for each piece of carry-on luggage.

There is no charge to carry-on a purse or small bag that can fit underneath the seat. But if you use that space above, cha-ching!  I see a future with giant purses!

If you check a bag it’s $25.00. You try to gate check it, $45.00. You carry it on and pay for it online, inadvance, $30.00.

The logic of this fascinates me to no end. Being a frequent flyer, I’ve seen it all. After 9/11, it was easier to just check a bag, rather than drag it through security and have your underwear held up for display. After the 4 oz. liquid ban was put into place, any high maintenance woman (me) was SOL for carry-on.

But then airlines started charging to check bags. We lowered our standards. Bought the damn quart size ziplocs and regrouped.

Spirit says, you’re gonna pay either way, so how much? You decide.

Today most travelers expect to pay for bags. Just like most consumers expect to pay a surcharge at an ATM. No one wants to – or thinks it’s a fair fee – but, like lemmings, when one bastard in a category is brazen enough to charge, the others will follow.

“Banks often move like a school of fish on punitive charges such as ATM surcharges and credit card late fees, so it’s just a matter of time before others follow suit,” said Greg McBride, a senior analyst at This in response to B of A quietly increasing their surcharge fee from $2 to $3.

Initially credit unions were adamant that they would never tarnish their image by charging such a fee. They argued against the rationale that ATMs are a convenience people should pay for. Just like the convenience of taking clothes and toiletries on an overnight trip. It’s more convenient, so you should pay.

But when banks started publishing their fee income, well, I mean, what would it hurt? Credit unions could charge a bit less and look like a hero. Right?

And then there’s Southwest Airlines to remind us of the beauty of a strong business model and the value of having the guts to stick with it.

Yesterday they announced that their stock is up 18% this year, and at the beginning of the year could boast it’s 37th straight year of profitability.

They will not charge for bags, and in fact, spent advertising dollars to show that they “love bags.”

So how do they do it?

1. They resist trying to be all things to all people. They fly one kind of plane. They fly point to point (versus hub and spoke). There is no first class – or as they like to say “everyone sits in first class.”

2. When sh*t happens (as it is wont to do in the airline business) their goal is to contact customers affected by a delay before they contact the airline. Builds loyalty and positive word-of-mouth.

3. They have the fewest customers complaints and cancelled flights. If your bag doesn’t make it, you get a $50.00 LUV voucher to use on a future flight.

They have been able to do the impossible. Good, cheap and fast.

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April 2010