Spirit Air to experiment with carry-on bag fees

NEW YORK Tue Apr 6, 2010 1:19pm EDT

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NEW YORK (Reuters) - Privately held Spirit Airlines said on Tuesday it will start charging as much as $45 for carry-on bags.

Spirit said the new charge will help the airline lower base air fares. The fee applies to carry-ons placed in overhead bins, while personal items placed under the seat remain free.

Spirit will charge $45 for these bags at the gate and $30 when paid in advance. Members of Spirit's frequent flier program will be charged $20 for carry-on bags if paid in advance.

The fee applies for travel on August 1 and beyond.

"Bring less; pay less. It's simple," Spirit's Chief Operating Officer Ken McKenzie said in a statement.

So far no other U.S. airline charges for carry-on bags, but major airlines will undoubtedly track consumer response to Spirit's new fee very closely.

"I personally think that would spark a major customer backlash," said S&P analyst Jim Corridore. "The general public is sick and tired of fees. They pay them because they have to."

Spirit's new charge now makes paying airline fees almost unavoidable, because fliers are unlikely to board flights without checked bags or carry-on items, Corridore said.

Still, Corridore added he would not be surprised if another airline tested out this new charge.

U.S. airlines are increasingly relying on new fees -- called ancillary revenue in industry parlance-- to boost their revenue and ultimately influence profits.

Although U.S. consumers have bristled at the slate of new fees airlines have conjured up, major carriers have said they are here to stay and are exploring other charges.

For example, Continental Airlines Inc recently unveiled a charge for exit-row seats.

Morningstar analyst Basili Alukos said charging for a carry-on bag makes sense for airlines because many consumers choose to tote their bags on the plane rather than wait for them at baggage claim. He added that shipping a bag is often more expensive than checking a bag.

"People are always willing to pay for a convenience," Alukos said.

(Reporting by Deepa Seetharaman; editing by Andre Grenon)

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