CEO on New Charge for Carry-On Bags

This is a rush transcript from "Your World With Neil Cavuto," April 7, 2010. This copy may not be in its final form and may be updated.

NEIL CAVUTO, ANCHOR: OK, you’ve got carry-on? Well, get ready to pay up. On Spirit Airlines, how about up to 45 bucks? The low-cost Florida- based carrier the first major airline to slap fees on some carry-on luggage. Up to now, they have been going after — the whole industry, seemingly — going after checked luggage. Now Spirit says 45 smackers for each piece of carry-on.

Spirit’s CEO, Ben Baldanza, here on what he’s up to.

Ben, what are you up to here? What is this all about?

BEN BALDANZA, CEO, SPIRIT AIRLINES: How you doing today, Neil?

Well, Neil, we all know that boarding airplanes has become a crowded enough and frustrating experience, as customers bring more and more on board in an attempt to avoid checked bag fees.

Well, Spirit is responding to that by lowering fares, lowering checked bag fees, making the boarding process easier. And even if you carry on a bag, you are still going to pay less than you used to pay before, because the bag fee is less than the prices have gone down. So, everybody wins. We think it’s a great deal.

CAVUTO: But if you never — no, but, wait, wait. If you have never paid a fee for carry-on luggage, and all you carry is carry-on luggage — like, that’s the only way I fly, carry-on — then — then — then...

BALDANZA: Well, if you only fly carry-on, though, Neil, when was the last time you paid one penny to fly?

CAVUTO: Well, I pay for the ticket. I pay for the ticket.

BALDANZA: Well...

CAVUTO: So, what I’m asking...

BALDANZA: Well, that’s right, but we’re charging fares as low as one penny plus fuel, and then you pay the bag fee on top of that. But do you ever come down to Florida, Neil?

CAVUTO: Yes, quite often.

BALDANZA: Oh, if you come to Florida, you buy our $9 fare club, which costs you $40 a year. That gets you one penny fares plus fuel. The fuel between New York and Florida is about $40 each way.

CAVUTO: OK.

BALDANZA: So, you’re paying at $80 for fuel. You join the fare club for 40 bucks. You’re round-trip, New York-Florida, for $120, plus taxes. Do you get a better deal than that when you fly?

CAVUTO: All right, well, that — that — well, that sounds a little too good to be true, because I was looking at your — I don’t doubt you, but I was looking at your standard fares.

And one thing that popped in my mind when I was looking at it — what is it here? Maybe you can help me here with this, Ben. This is a round- trip from Atlanta to Fort Lauderdale. The price of that ticket was quoted 192 bucks. So, let’s say I have a checked bag and my wife, for some reason, always has a carry-on bag. Now we’re looking at the two together 180 bucks, so now that ticket goes from $192 to 372 bucks. It’s weird.

BALDANZA: Well, again, you’re assuming $45 for the carry-on. And let’s set that record straight. No one has to pay $45 for the carry-on.

There carry-on charge is $30 at the ticket counter or $20 if you’re a member of our fare club. The $45 fee is only if you bring a bag to the gate and haven’t paid for it, and we have got to do the transaction at the time we’re trying to get the airplane out. So, most people don’t have to pay $45.

(CROSSTALK)

CAVUTO: OK. OK. But what if it’s a small bag, Ben? You know, it’s a real teeny bag?

BALDANZA: If it’s a small bag that fits under the seat in front of you, it will count as your personal item, and it will be free...

CAVUTO: Oh. Well, there you go.

BALDANZA: ... because you can carry on a bag, plus a personal item, and the personal item is always free.

CAVUTO: So, what’s to stop someone from looking at the potential of having a bag that is too big and just deciding to do what I have long advised, Ben, and that is, regardless of how long your stay, fly commando?

(LAUGHTER)

BALDANZA: Well, you know, there are some — there are some federal rules about that as well.

But, you know, you can carry on one bag and you can carry on one personal item.

CAVUTO: Right.

BALDANZA: The personal item is free. And the bag will be $20 or $30, but your fare is down by $40 or more, so the tradeoff is great.

You know, the people who are outraged at this, Neil, you know who they are? They’re the people who fly other airlines and are used to being charged $500 to $1,000 for their fare. And they say, I don’t want my airline to charge me for a carry-on, when I’m paying them $600 to get on the airplane.

CAVUTO: But why do this — but why do this at all? I mean, you’re drawing attention to the fees, and not your fares, right?

I mean, I understand what you’re saying, Ben, about your fares.

BALDANZA: Well, no.

CAVUTO: But people are going to look. You know, look at these guys. They’re nickel-and-diming us to death, checked bags, unchecked bags. Either way, I’m getting zoomed, where the fees are as much as the price of the ticket, regardless of the discounted ticket.

BALDANZA: But, again, when you’re looking at what other airlines charge, that makes sense. Spirit customers don’t see it that way. Our sales are up 50 percent since we have done this, because they’re looking at dirt-level fares, one penny, $10, $19.

And when you look at that kind of fare, adding 20 bucks for the carry- on is not a big deal.

(CROSSTALK)

CAVUTO: No, Ben, I understand what you’re saying. But you’re called Spirit Airlines, right?

BALDANZA: Right.

CAVUTO: So, now I want you to act like Holy Spirit Airlines.

BALDANZA: OK.

(LAUGHTER)

CAVUTO: And I want you to give me a wholly honest pricing of your ticket. So, I understand what you’re saying. You have this discounted fare. Then you have these added fees added on. And I know the industry is very loathe to just give a flat ticket price or raise a ticket price to reflect some of these added charges. But wouldn’t that be in keeping with just honesty, to say, all right, from here, if it’s to Fort Lauderdale, Atlanta, to any key city in Florida, this is how much we’re charging, all fees included?

BALDANZA: Well, Neil, do you want to go to a restaurant that has one price, you pay 100 bucks, and you can order — you can order — you have to order an appetizer, you get your choice of entrees?

CAVUTO: I’m not talking about a restaurant. I’m not talking about a –- I’m talking about you don’t have that kind of discretion when you fly.

But, lately, the industry has just been adding all this other stuff. So, at least with a restaurant, I can open up the menu. Here it is. Here’s what I’m getting.

With you guys — and no offense to your fine airline — I’m seeing this with a lot of your colleagues — you know, there’s a fee for this. There’s a fee for this.

You know, I think Ryanair, overseas, is charging you to go to the bathroom. So, you know, I’m...

BALDANZA: They’re talking about it.

CAVUTO: It just seems like, my God, just stop it.

BALDANZA: Well, you know, there’s certainly the option to offer a higher price and include a lot of fees. And there’s plenty of airlines that do that. American, JetBlue, a lot of them do that. But we’re a different airline. We offer you a really low fare, as much as — as low as one penny plus fuel, and give you the option.

CAVUTO: OK. But you don’t charge for anyone to go — you don’t charge for anyone to go to go potty, right? So, that’s — that’s not bad.

BALDANZA: No. And we never will, because that’s something you might need to do on the flight.

CAVUTO: Sure.

BALDANZA: Everything we charge for is optional.

Now, let me give you an example, too. There’s an airline out there who is saying bags fly free, right?

BALDANZA: I charge you — I challenge you to go to that airline’s ticket counter, give them your bag, and say, send it to Chicago for me.

CAVUTO: Right.

BALDANZA: That bag doesn’t fly free. It flies with you as a paying customer, and you pay for the bags, whether you check the bag or not.

CAVUTO: All right.

BALDANZA: At Spirit, we give you the chance to get a lower ticket if you don’t bring the bag. Isn’t that a good option?

CAVUTO: Well, at first, I thought you were talking about in-laws here, but, yes, that’s a very good option.

(LAUGHTER)

CAVUTO: We’re going to watch it closely.

BALDANZA: Well, that’s right.

CAVUTO: Ben, thank you very, very much.

BALDANZA: It’s great talking to you, Neil. Love your show.

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