Spice Jet announced that it will not immediately charge $15 per bag on all its flights, not for extra luggage but for the first bag! Crude oil had crushed from $48 to $14 per barrel in the previous 6 months. Spice Jet'snew baggage policy applied to all ticketed passengers except first class and business class. On top of incremental airline charges for food and snacks introduced the previous year, this new announcement stunned the travel public. Since Spice Jet and many other major carriers had belittled that policy as part of their overall marketing campaign against deep discounters, Spice Jet executives faced a dilemma.

Discussion Questions:

1. How should the airline respond when presented with an overweight bag by not charging any additional amount to its future passengers? Will this not affect the Airline Profitability?
2. Make a list of some of the issues that will need to be resolved if Spice Jet airline decides to routinely charge different prices to customers in the same class of servicewith additional luggage's?
3. What would you do if you were the CEO of Spice jet Airline while all other Airlines are charging additional $10 per bag on all its flights for extra bags only? Define and justify your Pricing strategy.