How can Allegiant Air justify charging so many fees? Here’s what the company says

Jaime Gentner

Richard N. Velotta

Richard N. Velotta

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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Discussion 9 comments

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  1. Jet Blue is still the best. Free first bag, no overhead storage fees, free snacks AND 35 channels of free TV.

  2. Richard, you do forget that i do have a choice in air travel. I am lucky enough to be close to O'Hare, MIlwaukee and Rockford airports so I do scout out several airlines when I need to travel. I know I have looked at Spirit Airlines before and while their initial fares are cheap, we decided to pass on them because of their endless fees.

    Allegiant's reasons for charging the fees make sense but it comes off as a money grab. What difference does my carry-on make in the grand scheme of things?

    Ultimately, the customer is going to decide whether this plan works for Allegiant. I'll now know that when I go to their website and see a heavily discounted fare to Las Vegas, I'll mentally add in $70 per person. I have a feeling that flying out of Milwaukee on Southwest will be more affordable.

  3. Allegiant should first figure out how to fly their old tin cans on time. With great regularity they operate late and usually without explaination. They completely screwed up my travel plans a year or so ago,...but have no problems asking for more money calling it an option.

    I'll go out of my way to fly SOUTHWEST,...every day, all the time. Much better option all around.

  4. i fly Southwest all the time without a worry in the world. on time, no lost luggage, no nickel and dime fees to complain about. plane is always full so they must be doing something right.

  5. Good old dipstick. When it comes to HIS money, he's careful with it. When it comes to yours & mine, not so much. Typical lefty. As for Allegiant. They are a private enterprise competing in the "free" enterprise system that works so well for most of us. Don't like to be "nickeled & dimed" to death? Well, you've got plenty of other choices to get where you want to go, including driving. That's what freedom is all about. Now if we could just get the Washington DC pencil pushing bureaucratic drones to understand that.

  6. Try flying Spirit. There's an airline that nickels and dimes you to death!!

  7. Chunky says:

    He doesn't like the nickel and dime approach to pricing of anything.

    They say they give customers a choice but if Allegiant is the only carrier serving some of those cities then those customers are somewhat captive audiences.

    However, Chunky respects the rights of any business to charge and form their policies as they wish. As they implied here they can let their customers make a choice to fly with them or not.

    Even if they lost 10% of their customers and 10% of their routes, as long as they are making up that 10% in fees they are doing less work and making the same money.

    Nickel and dime pricing still leaves a bad taste in the consumer's mouth. Allegiant's reluctance to display their charges and true pricing online exhibits and ambush approach to these additional fees catching the customer when essentially they have no choice.

    That's what Chunky thinks.

  8. Have already boycotted this airline just because of all the fees. I'd rather them just be up front and have a higher flat fare than all these little charges.

    I'll spend more if I have to just to fly a different airline, but I doubt I'd even have to. I fly Southwest regularly and never, ever have once had any problem.

  9. The baggage fee just made more people bring more carry on, so a carry on fee seems to make sense..not that I would be happy to pay it. SW fares and the no nonsense policy such as cancel a flight get full credit for it on your next flight is nice, but sometimes their fares get a bit out of line with the other carriers. And the big guys have better flights, IE, movies and a seat assignment many times much cheaper..