Republic unit adds $100 carry-on fee for some passengers

Frontier Airlines, a unit of Indianapolis-based Republic Airways Holdings Inc., plans to start charging up to $100 for a carry-on bag and $2 for coffee or a full can of soda, it announced Wednesday.

The new carry-on fee is for bags in the overhead bin, so small bags under the seat will still be free. Frontier said it will charge $25 if the fee is paid in advance, $100 if travelers wait to pay until they're at the gate.

Frontier spokeswoman Kate O'Malley said the $100 fee is to get travelers to take care of the charge in advance. "We don't want to charge that," she said.

Airlines began charging for the first and second checked bags in 2008. Passengers trying to avoid those fees have been stuffing as much as they can into carry-on baggage stashed in overhead bins, meaning those bins often run out of space. Fees are one way to get passengers to bring less on board.

O'Malley said the new charge is not really about raising money. "It's about Frontier's most loyal customers making it very clear that finding overhead bin space has become increasingly difficult."

Passengers who buy their tickets on the airline's website won't have to pay. That means one passenger in line at a Frontier gate might get to bring a bag on for free, while the next person in line might owe $100 for a similar bag. O'Malley said Frontier's website and check-in procedures are being changed to make sure passengers know about the fee before they get to the gate.

Frontier's new carry-on fee won't start until summer, though a date hasn't been set.

Passengers often grumble about baggage charges and other fees, but airlines love them. They argue that luggage costs money to handle, and passengers who want the service should pay for it. Many on Wall Street view the addition of baggage fees as a sign that airlines are charging enough money to cover the cost of air travel after years of losses.

Most haven't touched carry-on bag fees, though.

Spirit Airlines Inc. started the first carry-on fee three years ago, and fellow discounter Allegiant Air later followed. The only other airline with such a fee is Hungary's Wizz Air, said airline consultant Jay Sorensen, who closely tracks add-on fees. He estimated in a December 2011 report that Spirit's carry-on fee brings in $50 million a year.

Sorensen, a former executive with Midwest Airlines, flew Spirit recently and wondered what he'd find at the gate as passengers encountered Spirit's unusual carry-on bag fee.

"The boarding process was the smoothest I had seen in my airline career," he said. "I was expecting to see gnashing of teeth and a fight breaking out at the gate." The plane was full, he said, "and it boarded lickety-split."

Frontier is also following Spirit's $2 charge for coffee, tea, soda, or juice. Frontier said passengers who get soda or juice can keep the whole can, and it will give coffee refills for free. It will still give away water. US Airways briefly tried charging for beverages in 2008 but backed down seven months later after passengers complained and no other major airline followed.

Frontier's move to charge the carry-on fee if passengers don't buy direct from the airline is its latest effort to steer customers toward its own website. Airlines pay online travel sellers such as Orbitz $10 to $25 for each ticket sold. That has given all airlines an incentive to steer passengers to buy directly from them instead of going through an online travel agency.

Frontier has gone the furthest in this area, though. In September it began giving half as many frequent flier miles to customers who bought through an online travel agency. On Wednesday it slashed the mileage award to 25 percent of the miles of the trip. So, a 1,000 mile Frontier trip purchased from an online travel agency would earn 250 miles. It also allows passengers to choose their seat in advance only if they buy directly from the Frontier website.

Frontier has a loyal base of customers in its home city of Denver, but its business is shrinking and losing money. Revenue dropped 9 percent and its flying capacity shrank almost 13 percent in the first quarter, according to financial results released Wednesday by corporate parent Republic. Republic has been trying to fix Frontier's finances as part of selling the airline.