No one has tried that — at least not yet — but one small airline has led the way in the United States when it comes to passenger fees: Spirit Airlines, the no-frills carrier that prides itself for offering the lowest fares, then charging passengers for everything else.
Need an agent to print out a boarding pass at the airport? That’s $10. Want some water? That’s $3. Rolling a bag on board? The tag costs $35 from home and $50 at the airport. In all, there are about 70 fees enumerated in dizzying detail on Spirit’s Web site for customers to navigate.
To the millions of travelers flying on vacation this summer, the fees can be infuriating, but Spirit makes no apologies. In an age of consolidation in the airline industry, Spirit, with about 1 percent of the nation’s passenger traffic, has managed to succeed by going it alone, scraping for every dollar and scrimping on every cost.
“Spirit does everything it can to make or save a buck,” said Henry Harteveldt, a travel analyst with Hudson Crossing. “To its credit, Spirit doesn’t promise passengers that they’ll be coddled. Its customer service standards are terrible, and the airline’s actions have shown it doesn’t care about being liked or respected.”
The driving force behind that strategy is Spirit’s chief executive, Ben Baldanza, 51, an industry veteran who arrived at Spirit eight years ago with no experience at a no-frills airline. Along with an obsessive attention to keeping costs low, Mr. Baldanza argues that the cornucopia of fees allows the airline to keep its fares lower than rivals.
The airline, known for its tasteless ads (during the presidential election, one ad talked of Spirit having “binders full of sales. Women will love them!”) is modeled after Ryanair, which charges low fares for flights throughout Europe with a minimalist approach to customer service.
“I cringe a little when people say I don’t care about customers,” said Mr. Baldanza, who brims with missionary zeal. “We care about the thing that customers tell us they care the most about, and that’s offering the lowest possible fares.
The customers who fly Spirit absolutely understand the trade-off.”
On a recent day at La Guardia Airport, passengers seemed to be taking the fees in stride. Two students forgot about the fee that Spirit charges for carry-on bags. That did little to reduce their enthusiasm to fly to Las Vegas despite the early loss. Kevin Reed, a photographer flying to Myrtle Beach, S.C., paid an extra $10 on top of a $35 checked-bag fee because he failed to do so when he bought his ticket.
“They got me there,” he said, shrugging. “But I’m still saving $400 over flying with Delta.”
Not every customer has the same reaction, though. Spirit is routinely rated as the nation’s worst airline because some travelers deem the fees unfair.
The Transportation Department receives far more complaints about Spirit than other carriers, with 6 to 8 complaints per 100,000 passengers compared with the industry average of 1.4. And Spirit’s on-time record is similarly abysmal, at 68.8 percent compared with 80 percent for the industry average. The best airlines are in the mid-90s.
Critics point out that the inflation of air travel fees makes it increasingly difficult to compare the cost of travel between airlines.
“The fee-for-everything technique allows airfares to be advertised as much lower than the overall cost,” said Paul Hudson, the president of FlyersRights.org, a consumer group.
Mr. Baldanza acknowledged that the process can be tricky. “You can’t sleepwalk through the process,” he said.
But the model has allowed Spirit to offer cheap tickets. Since 2008, Spirit’s airfare has dropped by 20 percent, averaging $75 in 2012 compared with $94 in 2008. The difference often jumps out at a customer searching for flights. On Friday, Spirit was offering a nonstop flight from Oakland, Calif., to Portland, Ore., in mid-July for $156; the same trip was $296 on Delta.
Because of its growing list of fees, however, nonticket revenues grew to $51.39 in 2012, from $18.61 in 2008. As a result, while fares fell, Spirit’s total revenue per passenger grew by 12 percent from 2008 to 2012, reaching $126.50. Fees now account for 41 percent of Spirit’s revenues, an industry record.
The trade-offs are obvious. Spirit has no business class, offers no movies and no Wi-Fi, and its seats don’t recline, legroom is the tightest in the business. But a nonstop flight from Dallas to Orlando costs $366 on Spirit and $499 on American Airlines.
Still, Spirit is not about to take over the domestic industry. The carrier, which caters to leisure travelers and not the business flier, has only 49 planes, compared with more than 600 for Southwest. But it is growing about 20 percent a year when most of the industry is contracting or staying flat. It plans to add four more planes this year and another 17 over the next two years.
The airline, based in Miramar, Fla., flies about 50 routes, mostly on the East Coast, Florida, Central America and the Caribbean. It started flying as a charter airline in 1980, but adopted a low-cost model in 2007, when new investors charted a different course for the unprofitable airline.
Last year, Spirit had its fourth consecutive year of profitability, and generated some of the best returns in the industry, along with a record return on invested capital of 26.5 percent.
Investors have responded. Since the company’s initial public offering two years ago, shares have more than doubled. They traded at $30.43 on Friday, valuing Spirit at $2.21 billion.
Mr. Baldanza said he is not done and wants to grow the fleet to 150 planes within five years and account for about 3 percent or 4 percent of traffic. He likens his airline to Southwest in the mid-1980s, when the low-cost airline was the industry’s maverick.
Like Southwest before it, Spirit achieves significant savings from its bare-bones operations. This explains why the airline charges for water on board, since carrying bottles has a cost that Mr. Baldanza refuses to pay. “If you can do it yourself, it’s free,” he said. “If we have to do it, you’ll pay for it.”
Another way Spirit cuts costs is by packing more passengers on its plane, which all have 178 seats, while similar models on US Airways and JetBlue have 150. This allows Spirit to spread its costs. Its planes also fly longer each day — nearly 13 hours, allowing for more flights. Southwest, by contrast, flies its planes about 10.4 hours a day.
At La Guardia, Spirit operates 12 flights every day out of a single gate. Passengers are not given many scheduling options either.
“We schedule our flights when the gate is available as opposed to when the customers want to fly,” Mr. Baldanza said. “It doesn’t matter that no one wants to fly at 9 a.m. or 2 p.m. or in the middle of the night. The reality is that they want to fly when they get the low fare.”
Spirit also makes sure its flights are always full and sets its prices accordingly. (There’s a joke inside the airline that empty seats don’t check bags, Mr. Baldanza said.) As a result, it costs Spirit just 10.15 cents to fly one passenger for one mile, compared with United’s 18.25 cents and Southwest’s 11.08 cents.
Spirit was the first airline to charge for checked bags, in 2007, a move others eventually followed.
Last year, airlines collected $6 billion just from checked bag fees and reservation changes, up from $1.4 billion in 2007, according to the Department of Transportation.
Spirit was also the first airline to charge passengers for their carry-on bags, but that’s still a red line few have dared to cross except for Allegiant Airlines and Frontier.
The big question is whether travelers will eventually push back on fees.
“People don’t like the extra fees, they don’t read the fine print and they get mad,” said Ann Sheaffer, an accountant checking in for a Spirit flight to Dallas/Fort Worth International Airport. “But it’s all there in black and white. You just have to read it and understand it.”
(Jad Mouawad - The New York Times)
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