To bundle or unbundle: that is the question

Spirit Airlines announced yesterday they are going to charge for carry-on bags. Horrors, is nothing sacred? At first glance this approach might seem harsh. Or mercenary, or stupid. On further observation, maybe not.

The goal of most air travelers is to get from point A to point B as quickly as possible. The days of luxury air travel ended decades ago. Carry-on bags cause longer boarding and deboarding times. In addition, dealing with last-minute bags that don’t fit in the overhead also causes delay in departure. Logic would suggest that it would be in everyone’s best interest if the overhead bins were not needed.

However, in a logical progression that only an airline executive could follow, the airlines started charging for checked bags. The result? Two negatives: More carry-on bags and more carry-on bags that needed to be gate checked at the last-minute. (Indeed, you can avoid the checked bag fee if you just check your bag at the gate at the last-minute.)

The obvious solution would have been to incent people to check their bags and carry nothing on the plane that did not fit under the seat. To do that would have required either a carry on bag fee or a MUCH faster baggage recovery process at baggage claim, or both. (Losing fewer bags would also have to fit in there somewhere.) Again, however, the airlines are not known for their customer-centric thinking.

Spirit has recognized a few things:

  1. Fewer carry-on bags helps the airline be more efficient, which ultimately helps passengers.
  2. People with carry on bags prefer to get on the plane early so they get their overhead bin space. People are willing to pay a premium for that. (Southwest, which has eschewed unbundling, charges a higher ticket price for an earlier boarding slot. While this might get you a better seat [exit row] on a initiating flight, it for sure gets you overhead bin space.)
  3. This reduced “chaos” at boarding gets them out on time, with less ground time. And, as Southwest Airlines is famous for saying: “Planes on the ground don’t make money.”
  4. Unbundling services is appreciated by many people.

Will this work for Spirit? Don’t know, can’t say, hard to tell as our Principal, Neil Reckon, likes to say. However, it is a bold, customer-centric step. At least for those customers who want it that way. And truth be told most other airlines are all the same anyway. So a difference can matter.

What are you doing to think outside-in (customer-centric)? What are you doing about your pricing strategies? Are you consciously bundling or unbundling? Or is hope your strategy?

Mitch

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One Response to To bundle or unbundle: that is the question

  1. Pingback: Free markets or… « Value Acceleration

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