Originally Posted by
RadarColor
Tell us more Mr. Wizard.
"A low-cost, low-fare carrier such as Spirit Airlines Inc. makes its living on passenger fees. That those fees, known as non-ticket revenue, dropped by more than $2 per passenger in the first quarter, compared to a year ago, might suggest a shift in travelers' tolerance for additional charges.
Spirit blames its sagging fee tally on low fares: Travelers seeking out the lowest fares have had plenty of choices, with a raft of bargain flights, some below $50, departing from cities nationwide. Those price-sensitive travelers enticed by the lowest of low prices tend to avoid racking up additional fees"
Did you read the Bloomberg article you are quoting or just copy and paste the first paragraph? Price compression is a problem for low-cost airlines because CASM gaps between low-cost and legacy operators narrow when oil is cheap. Price is clearly the main product at ULCC's, and downward pressure on fares makes the product look less appealing when bundled-product airlines are offering tickets much closer in price.
None of this is necessarily a big surprise, the low-cost business model tends to not see quite the same high-highs and low-lows as the legacy product for various reasons. This is not a sign that passengers are waging war on airline fees, they are just choosing other options because they can afford to. That will change in the next economic cycle, and that is the good thing about the low-cost model - it is rather resilient to changing economic conditions.