I love that Spirit Airlines exists. They serve a different market niche than I find myself in. Air Asia uses the slogan, “Now Everyone Can Fly!” and Spirit is very much in that same mold.
I don’t like their miles. I love their advertising. But at root I can appreciate that if their route network serves you and you can navigate their myriad fees, you can often fly cheaper than any other alternative.
And they do seem really transparent about their fees if you book on their website. It’s bookings through third party sites that can lead to confusion, where folks may not know what they’re getting into. That’s the key, and don’t book Spirit if you don’t want the product Spirit offers.
The AP’s Scott Mayerowitz spends time playing board games in the home of Spirit Airlines CEO Ben Baldanza. And it’s a fascinating read.
On Spirit’s fees:
Passengers don’t necessarily trust Spirit either. They are attracted by low fares but then compelled to play a game of dodging fees. Some drive to the airport to avoid paying up to $16.99 extra each way to book online. Customer service is notoriously lacking, something Baldanza attributes to keeping costs low so tickets are affordable. Each boarding pass printed by an agent at the ticket counter costs $10. A bottle of water, free on most airlines, costs $3. Spirit has 24 different types of baggage fees, including ones for placing a carry-on bag in the overhead bin.
On varying fees based on demand:
Baldanza also plans to change the structure of some existing fees, increasing or decreasing the price of checking a bag or picking a seat based on demand.
“The idea that a bag is more expensive at Christmas than it is in September hasn’t really been broached yet,” Baldanza says.
On inflight cell phone use:
Would he allow in-flight cellphone conversations if the government lifts its prohibition?
“Sure,” he says without hesitation. “If we can make money at it.”
He notes that those fees would allow for lower ticket prices. He knows — and doesn’t care — that most Americans oppose such calls.
“People are only annoyed for a while,” Baldanza counters. “They were annoyed that (Spirit’s) seats didn’t recline.”
Here’s where I don’t buy what Baldanza is selling, though, in terms of the future:
Baldanza’s ultimate dream — if the government would let him — would be to create two components of a ticket: the price of fuel and everything else. Passengers would pay more or less, depending on the cost of fuel the day they fly.
“It just takes out a huge risk,” he says. “I don’t know that we’ll ever get there, but the idea of being able to make fuel a true pass-through would be revolutionary for the industry.”
There’s no inherent reason why the customer should bear fuel risk rather than the airline, and though it mean seem there’s no inherent reason that the airline is the one to bear it either they have greater ability to bear those fluctuations than an individual consumer does, and they have a greater ability to mitigate risk as well.
In other words, it’s more efficient for the airline to bear the risk of fuel price fluctuations because it faces lower transaction costs in doing so. The airline can hedge fuel pricing. The consumer can’t in any ready way, at least now, though Spirit might find a way to sell their passengers fuel hedges. A Spirit Airlines ticket could itself become a complex derivative. One could even imagine Spirit tickets bringing down an investment bank.
Because I’m a 13 year old boy at heart, I love Spirit’s advertising even if it won’t ever actually get me in one of their planes.
Back in November they passed the ‘Affordable Fare Act’ (because their website works!). Though Spirit does often have low fares, there are definitely no subsidies (or cross-subsidies), only ancillary fees…
When the Anthony Weiner sexting story first broke two years ago, Spirit ran an Anthony Weiner sale. And a More Bang for Your Buck sale on flights to Cartagena when secret service agents were revealed to have frequented prostitutes there.
In 2010 they invited customers to check out the (suntan) oil on the beaches that they fly to… during the BP oil spill. (At the time I was just thankful they hadn’t advertised ‘a flood of low fares to New Orleans’ after Hurricane Katrina.)
Their most famous ad has to be their “MILF Sale” (Many Islands, Low Fares)… and in keeping with the ‘theme’ they ran a TV commercial, “Think that’s low? Spirit Airlines fares are even lower!”
With 90 day expiration I don’t even collect their miles. And redeeming seems like punishment. After Greyhound started a loyalty program in 2006, I coined the conundrum of having nothing good to offer “the Greyhound Road Rewards problem.” Spirit epitomizes this. They do not have redemption partners. The reward for traveling on Spirit is… more travel on Spirit.
Nonetheless, they have a fascinating model, and the Mayerowitz piece offers an interesting insight into the people propagating that model.
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