Global airlines brought in $27 billion in nonticket revenue last year, an 11-fold increase over 2007

Thriftiest Fliers Outwit Fee-Hungry Airlines

Travelers Pack Special-Sized Bags, Use Other Tricks to Avoid Extra Charges

JACK NICAS

Updated Nov. 25, 2013 5:28 p.m. ET

The airline industry’s increasing reliance on extra fees is spawning a sort of arms race between discount carriers and their thriftiest customers to outsmart each other. Global airlines brought in $27 billion in nonticket revenue last year, an 11-fold increase over 2007, according to airline-consulting firm IdeaWorks Co. Nonticket revenue includes fees for extras, as well as sales of frequent-flier points, hotel rooms and rental cars, among other things.As selling extras becomes more critical to airlines’ bottom lines, the fees keep increasing. Most U.S. airlines now charge for checked bags on domestic flights, and three charge for carry-ons. Four big U.S. carriers recently upped their ticket-change fees to $200 from $150. British Airways IAG.MC +2.18% even charges some business-class fliers to choose a seat.

The rapidly expanding fees are changing fliers’ behavior. Witness, for example, travelers trying to stuff bulky carry-on luggage in overhead bins to save on checked-baggage fees.

At the vanguard are the penny-pinching fliers of Spirit Airlines Inc., SAVE +1.95% one of the most profitable carriers in the U.S. It notoriously couples its cut-rate fares with dozens of fees, which bring in two-fifths of its revenue. Spirit and its “ultralow-cost” peers, likeAllegiant Travel

Co. ALGT +3.24% , are giving rise to a new breed of extreme budget travelers who pack ultralight and seek out other tricks to avoid fees that are the hallmark of their preferred carriers.

Brent Hopkins, a 25-year-old from Michigan who has flown Spirit for years, designed a bag to fill the roughly 16-inch by 14-inch by 12-inch space under Spirit’s seats—the only place it guarantees bags can fly free. He said he has sold thousands of the bag, dubbed the CarryOn Free, which retails for $70.

More than 25,000 people have watched a YouTube video produced by a Spirit flier explaining how to best pack a similar-sized bag for a weeklong vacation to avoid Spirit’s fees.

Buddy and Swanette Smith, a retired couple from Conroe, Texas, have devised their own ways to fly Spirit fee-free. The couple discovered Spirit last year after waiting in line for 30 minutes at a local travel agency to score two 20,000-mile vouchers. They and a friend have since cashed those in for five almost-free round trips to Las Vegas. They pack only a backpack each for a roughly four-day stay, and bring water and snacks for the flight. They print their tickets at home and let Spirit assign their seats.

“Some frequent fliers like to be pampered, like to have the extra frills,” said Mr. Smith, 64. “My wife and I are capable of being spartan.”

In January, the family is flying Spirit to Nevada for a skiing trip. Their big parkas won’t fit in their backpacks. “So we’re just going to wear them on the plane,” Mr. Smith said.

A Spirit spokeswoman said the company, which operates about 240 flights a day, is proud that its business model of “unbundling” the base airfare from other extras gives customers the option of flying so inexpensively.

This reporter has flown Spirit more than a dozen times and virtually never paid a fee. That includes traveling to Colombia for 10 days with just a backpack—and persuading his girlfriend to do the same. Based on that experience and interviews with Spirit officials, here are some ways you too can avoid fees on the airline this holiday season:

Book on Spirit.com. Spirit fares are $10 more expensive when you book over the phone or via third-party websites such as Orbitz. Booking on those sites also means you’re more likely to get hit by an unexpected fee because you’ll miss the various disclaimers about extra charges that Spirit.com customers receive.

Leave the roller bags at home. Spirit charges $30 to $100 for checked and carry-on bags, depending when the bags are paid for. Customers can bring one free “personal item” that fits under the seat in front of them. Most backpacks and smaller duffel bags will fit. Roller bags almost always have to be paid for.

Spirit charges fliers $100 who bring a bag to the boarding gate that is too large to fit under the seat—and hasn’t yet been paid for. A spokeswoman said that the fee is designed to deter fliers from flouting the rules, and that gate agents are trained to strictly enforce it.

However, frequent Spirit fliers say customers with larger backpacks and duffel bags generally slip past. If a gate agent asks to measure the bag, duffel bags are typically more malleable and can be crammed into the bins that measure the maximum size for free bags. If a bag isn’t fitting, take out heavier clothes and wear them on the plane. There is no charge for extra layers.

Another trick: Paying for a carry-on bag simply gives fliers a higher boarding priority, ensuring they will get overhead bin space. If you don’t pay for a carry-on bag, you’re still free to put your bag in the overhead bin—if there is room.

Bring one bag. Spirit permits only one “personal item,” so it will also charge fliers $100 at the gate for bringing a small extra bag, like a pocketbook. Either make room for your pocketbook in your bag or leave it at home.

Spirit does allow fliers to carry on umbrellas, coats, cameras, infant diaper bags, food, books, e-readers and small tablets.

Bring your own water. Nearly everything on board Spirit is for sale, including water for $3. Bring an empty water bottle through security and fill it at an airport water fountain. If you forget a bottle, order a glass of ice—which is the one free thing on board—and wait for it to melt.

Print your boarding pass at home or at an airport kiosk. Spirit charges $10 for boarding passes printed by a gate agent. It recently canceled plans to charge $2 for passes from kiosks.

Let Spirit choose your seats. Spirit charges fliers to choose any seat, including the middle seat in the last row. If you let Spirit pick, it doesn’t charge—and it will typically seat two fliers together who book together.

Buy your tickets at the airport. This trick only the most frugal travelers know. Spirit charges a “passenger-usage fee” on every booking made online—typically $17 each way. (Spirit made $150 million from this fee alone last year.) But there is no fee if you book your ticket at the airport—like travelers did decades ago. Typical savings: $34 per round-trip ticket.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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