Spirit Airlines has been in the news this past week for becoming the first airline to charge customers for their carry-on luggage. Beginning August 1st, 2010, anyone that brings a bag that must be stored in the overhead compartment on a flight will have to pay $45 at the time of the flight, or $30 if reserved in advance online. It was only a few years ago that airlines adopted the policy to charge consumers for their checked bags and most are wondering what kind of fees will be next in line.
While Spirit will be the only airline implementing this new fee, industry experts expect other airlines to quickly follow suit. Why in the world would one airline publicly announce that they are charging more fees when it should obviously lead to a drop in business you ask? I think an example is in order!
Let’s say in 2005, an airline like Spirit charged $200 for a one-way ticket from NY to LA. The addition of the checked baggage fees allow Spirit to now advertise the fare as $150 instead of $200 because they found the average flier checks two $25 bags (Again, for example). Now, with the addition of another $45 fee, Spirit may be able to advertise the one way ticket for $125 (or less), which is significantly below it’s competition. The next time you visit CheapTickets, Orbitz or Travelocity, you’ll probably find Spirit flights as some of the cheapest but you and I know that when the flight is all said and done, you would have paid just as much if not more for the “cheaper” ticket. Sneaky isn’t it.
Enough about Spirit Airlines, let’s check out some of the best money articles from the past week.
Millionaires Who Gave It Away @ MSN Money: Can you imagine working you’re entire life to build financial security for you and your family, only to give it all away? Seems like such a strange thing to do but when it’s for a good cause I cannot question the motives.
CitiMortgage Told Me to Default on My Loan @ WiseBread: Bank of America has put a lot of pressure on other lenders to forgive partial principles if your mortgage is under water. It would appear Citi isn’t budging just yet.
5 Surprising Tax Facts @ Motley Fool: My favorite bit of knowledge is knowing that the current tax code is more than 7 million words. Sometimes I have trouble finishing a 1,000 word article!
Cash as a Painkiller? @ Five Cent Nickel: The amount of prescribed drugs given out every year is staggering so the next time you go for the bottle, go for the wallet instead.
Mind Over Money @ Suburban Dollar: Very interesting article here on how you can save yourself a lot of money by setting your mind on “frugal”.
Knowing When To Upgrade @ The Suns Financial Diary: Upgrade what you ask? Well everything! The decision on when to upgrade could save you thousands, so pay close attention.
Can You Make a Living Recycling 10 Cent Bottles and Cans? @ Fiscal Fizzle: Even though the idea sounds pretty crazy, it’s not as off the wall as you think. When you do the math, there is actually a way to make a good amount of money collecting bottles and cans.
Published or updated May 23, 2011.