Spirit’s new strategy: Be a less terrible airline
When low-cost carrier Spirit Airlines begins new service from Hollywood Burbank Airport to Las Vegas later this month, passengers may be surprised to find the carrier do something it hasn’t been known for: Arrive on time.
And when the Florida-based carrier lands in Sin City, the chances that Spirit fliers will file a complaint about the service will be much lower than in the past.
The carrier that shook the airline industry a dozen years ago with its ultra low-cost fares and high fees has overhauled its business plan, easing back from its single-minded drive to maximize profits and focusing on improving customer service.
The result, so far, has been a lower profit margin but better service, fewer lost bags and fewer customer complaints. Spirit has even raked in a few industry awards.
“You gotta get the mix right, and it seems now that the mix is pretty good,” aviation industry analyst Seth Kaplan said of Spirit Airlines.
Spirit still has one of the highest rates of passenger complaints when compared to its industry rivals, but the carrier has dramatically reduced that rate to 1.74 complaints for every 100,000 passengers in March from 9.68 complaints in March 2016 as the reinvention was being launched, according to federal statistics.
The changes at Spirit helped win the carrier the titles this year of “value airline of the year” by Air Transport World, an online trade publication, and “most improved airline of the year” by the Airline Passenger Experience Association, an industry trade group that relies on ratings by passengers flying on nearly 500 airlines to judge carriers.
“Their improvement matches the incredible strides that they have made in being one of the best airlines in the U.S. Department of Transportation reports for on-time performance,” the group’s chief executive, Joe Leader, said in a statement.
But Kaplan said that Spirit Airlines didn’t adopt a more passenger-friendly business plan for altruistic reasons. As larger rivals began in the last few years to sell bare-bones fares to compete for budget-minded travelers, Spirit Airlines was forced to reconsider its niche in the industry, he said.
“It wasn’t enough for the airline to be cheap because everyone was cheap,” Kaplan said.
Spirit Airlines appears to be following the lead of Ryanair, an Irish low-cost carrier, which tried to improve its reputation as the most hated European airline when its chief executive, Michael O’Leary, promised in 2013 to “stop unnecessarily pissing people off.”
Similarly, Domino’s Pizza in late 2009 launched a self-deprecating advertising campaign admitting that its pizza was bad and promising to do better with a new line of artisan pizza, remodeled restaurants and improved technology.
It’s a fraught strategy.
Ryanair Holdings and Domino’s have enjoyed a resurgence in revenue, earnings and stock price, although Ryanair lost some ground in the last fiscal year amid labor problems. And both remain subject to rude memes such as “Domino’s Still Sucks!”.
Some Spirit passengers say they have seen an improvement in the airlines’ service, but they say fliers must be prepared to pay fees for services they normally get for free on other carriers.
“The trick with Spirit is that if you know what you’re getting in to, you’re going to be fine if you do the math,” said Jason Rabinowitz, a travel blogger from New York, who often flies Spirit to Florida on leisure trips because of the low fares. “Spirit isn’t always cheapest after all the bag and seat fees, but it often is.”
Spirit Airlines still has plenty of critics, many of whom post their gripes about the airline on social media.
“They are the worst,” said Mandy Podlesny, a Keto nutrition coach from South Carolina who flies Spirit Airlines for business on a regular basis because she has few other choices from her nearest airport, in Myrtle Beach.
Her latest flight from South Carolina to Philadelphia was delayed for two hours but the gate agent and her pilot gave conflicting stories about the cause of the delay.
“They just really don’t care about customer service,” she said.
Still, the turnaround at Spirit Airlines has caught the attention of industry experts.
“It looks like management is doing something right,” said Madhu Unnikrishnan, editor of the trade publication Airline Weekly.
Only three years ago, Spirit Airlines had the industry’s worst on-time arrival rate and among the highest rates of lost luggage and passenger complaints.
The latest government data show that Spirit Airlines had a 86.4% on-time arrival rate in March, behind only Hawaiian Airlines, with an 86.8% rating. In contrast, Spirit was ranked last among all major airlines in March 2016, with an on-time rating of 64.7%, according to federal data.
One of the keys to turning the airline around, according to Spirit Airlines Chief Executive Ted Christie, was adding more time in between flights to respond to unforeseen problems such as mechanical issues and staffing snafus.
When an airline flies back-to-back flights around the clock, a delay in one of those flights creates a ripple effect that disrupts the schedule of many subsequent flights. Such delays can cost the airline to pay staff overtime or to rebook passengers from delayed flights, among other expenses.
“We believed that among other things, we were causing disruptions and spending money to resolve those issues on the back end,” Christie said during an interview at Los Angeles International Airport. “If we backed the airline (off) just a tad, we will save enough money on the back end to justify the extra time.”
The other key to Spirit’s turnaround, he said, was increasing communication between workers and executives to fix ongoing problems.
This was done by scheduling a weekly meeting every Thursday at 3:30 p.m. at the Spirit Airlines headquarters in Miramar, Fla., with executives, representatives for the flight attendants, baggage handlers and others to discuss ongoing headaches and chokepoints.
The meetings began informally in spring 2016 under the leadership of the previous chief executive, Robert Fornaro, and continued after Christie took over the helm in January.
Among the topics discussed at the meetings were which flights were most often delayed and why, how staffing problems could be improved and whether additional terminal gates were needed to keep the planes on schedule.
“The best way to get a complex logistics company to run well is for people to break down walls and talk about it,” he said.
With fewer delays and less lost luggage, complaints declined and morale improved, Christie said.
“As the business runs more smoothly and interaction with guests are much more positive, that feeds upon itself,” he said.