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A Senate subcommittee report published on Tuesday revealed publicly for the first time how budget carriers Frontier and Spirit incentivized staff to charge passengers extra fees.
The report, viewed by Business Insider, revealed that between 2022 and 2023, the two airlines paid workers $26 million in bonuses "to catch passengers allegedly not following airline bag policies, often forcing those passengers to pay a bag fee."
The incentive programs applied to premium seats and carry-on bags that exceeded the personal item size allowance. Frontier paid the most commissions: about $18.8 million, according to the congressional report.
For domestic flights, Frontier workers earned $10 for each oversize carry-on bag purchased at the gate or online within 60 minutes of the passenger's departure time, $3 for carry-ons bought at the airport ticket counter, and $3 for selling extra legroom seats.
The airline's commissions were smaller for international flights: $1 for bags charged at the gate or online, and $0.50 for those purchased at the ticket counter.
Spirit employees earned $5 for charging oversize carry-on bags at the gate. They also earned $5 for selling the Big Front Seat, $4 for charging overweight checked bags, and $2 for selling exit row seats. The report did not say whether bonus amounts varied between domestic and international flights.
Certain managers at both airlines also earned a commission if their airport or region met a specific monthly revenue goal from ancillary fees.
Frontier and Spirit employees were ineligible for the bonuses, however, if customer experience ratings declined or the airlines received a certain number of complaints.
Data from the Department of Transportation and analyzed by the subcommittee showed both Frontier and Spirit's baggage complaints increased after the incentive programs began.
According to the report, Frontier adjusted the structure of its incentive program in October 2023 to try to collect more bags while limiting the number of passenger complaints.
Carry-on bags are not included in basic fares for Frontier or Spirit. They must be purchased as an add-on and fit into the carriers' personal item size checkers stationed at airports.
The report said the incentives "may inappropriately encourage abuse of discretion" — meaning gate agents might be prone to unfairly categorize items as too large in order to collect higher bonuses.
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TikTok videos that surfaced in 2022 showed customers being charged for personal items that appeared to fit into the size checker. The report discussed these instances.
When asked about the videos, Frontier's vice president of pricing and revenue management told the subcommittee that it's possible a bag fitting in the size checker was denied for reasons other than its size. It could contain a lithium battery, for example, he said.
The report said both airlines denied that the programs are being abused.
Spirit and Frontier told the subcommittee that the programs were designed to maintain compliance with baggage policies and ensure that customers who pre-paid for luggage were treated "fairly."
The Frontier executive told the subcommittee that the airline did not want customers "to take more services than they have paid for."
The report said both airlines started the programs to boost ancillary revenue. It said Frontier projected it would earn at least $40 million in fees in the first year. The report also said Spirit's ancillary revenue increased during the program.
In statements to BI, both airlines emphasized the goal of treating guests "fairly" and "equally." Spokespeople for both airlines said that the budget business model unbundles fares and increases people's access to affordable flights.
"We respectfully disagree with numerous statements and conclusions contained in the report," Spirit told BI. "With that in mind, we believe it's time to come together and discuss meaningful initiatives that would even the playing field between larger and smaller airlines to benefit all travelers."
