Spirit Changing It Up

Spirit

Spirit is definitely a unique kind of airline. Just a few years ago, they were a small airline flying ratty old MD80s out of their Detroit hub as well as sending cold weather travelers down south to warm up. Here is their route map from January 19, 2001.

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It’s not much to talk about. They had pressure from Northwest in Detroit and ultra-competitive routes like Chicago – Los Angeles were certainly not helping the bottom line. Now 6 years later, it’s a very different airline. Here is the current route map.

nkroutesjan07

As you can see, Detroit it still there, but the focus has moved south to the Caribbean. The airline has taken their all-new Airbus fleet (the MD80s have been thankfully retired) and based most of their operations in Ft Lauderdale these days. The seem to be happy with this strategy because they continue to expand at a rapid pace.

On Jan 16, the airline announced flights to Aguadilla (Puerto Rico) beginning in April. January 18 brought an announcement of flights to Port-au-Prince (Haiti) at the end of March. Just yesterday, Spirit said they’ll start flying to St Maarten (Netherlands Antilles) in April. They have enough planes to fly these routes now, but they clearly want to continue this aggressive expansion in the long run. That’s why today they decided to add 30 new Airbus A319s beginning in 2009.

This may all sound great, but that’s a lot of seats that need to be filled. How are they going to be able to pull it off? Well they’ve definitely gone for the lowest common denominator. The airline has decided to be an extremely low cost and low fare carrier.

At the beginning of the year, Spirit announced they were down to a 5 cent cost per available seat mile excluding fuel. That compares quite favorably with most airlines, so they do have an edge on that side of the equation. Of course, that means they can charge less and theoretically be able to profit at fare levels where other airlines can’t. That has been the strategy as of late.

The airline has had plenty of offers promoting low fares including one that Business 2.0 ranked the eighth dumbest moment in business in 2006. The airline launched a campaign to help find Jimmy Hoffa by digging for his remains online. The reward involved fares from $39. While it is clearly tasteless, it got the job done for the airline by generating a ton of press.

More recently, $39 would be considered an expensive sale fare. For awhile, they were stuck on the $8 fare sale, but this year has brought the 5 cent fare sale. Now they’re starting to sound like Ryanair and other European airlines that charge very little to get on board but then nickel-and-dime you for everything else you might want above the basic transportation. It’s a model that has worked very well in Europe but has never really taken hold here in the US. Along with Allegiant and the soon-to-be launched SkyBus, Spirit will try to see if the model can work over here.

So far, some of the indicators are pointing in the right direction from a customer interest standpoint. Check out this chart from Alexa comparing the traffic rank of the Spirit website to both Northwest and AirTran.

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As you can see, Spirit has really skyrocketed since the beginning of the year. They’re basically neck-and-neck with the much larger AirTran now in terms of traffic. That means they’re doing a good job of directing bookings to their lowest cost channel – their own website.

But the news is definitely not all good. Even though the airline isn’t public, they do have to release financial information to the government. The most recent release was for the 3rd quarter of 2006 and it doesn’t paint the prettiest picture.

For Latin flying, the airline had an operating loss of $3.3 m for the quarter. That’s worse than the $705,000 loss from Q2 and the $1.6 m loss from Q1. They’re losing even more on their domestic operation. Net loss for the entire airline for Q3 was almost $16 m. Clearly, that’s why they’re moving toward the Caribbean quickly. They at least lose less money there than they do in the US. That sort of strategy still doesn’t work. You’ll run out of money at some point.

Hopefully the airline has plans for turning this situation around, but it’s not going to be easy. Look for more Caribbean flying and cheap sale fares to lure people in to the website, but those fares will be very limited. They need to start charging more here soon or the money may run out.

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4 comments on “Spirit Changing It Up

  1. Dear Folks,
    Beware of this airline if you have any special needs.
    Last August we flew from Atlantic City to San Francisco via Detroit.
    I am handicapped and use an electric wheelchair to the gate.
    It was returned to me in San Francisco after the lDetroiot leg with the battery completely broken. I reported it immediately andcompleted what paperwork they required. I was promised someone would call within a dew days. (They had both a home and a cell number.)
    In the approximate two weeks that followed I repeatedly tried all the phone numbers on their paperwork but could not get through or leave a message–messages full. I attempted to e-mail a letter to them–incorrect information on paperwork. Someone located another e-mail which we used–no response.
    Telephone attempts continued without success. I stopped at Spirit’s airport counters whenever I flew. No one could help me. Finally in November I sstopped in Orlando where a clerk was so kind as to give me the phone numbers, e-mail information, and corporate address. I again tried the phone calls but could not get through. I e-mailed again–no answer. I copied everything and mailed it off to Fort Lauderdale’s corporate offices. It is now February 2008 and Spirit has yet to contact me.
    Most airports have a desk for the handicapped when travel problems occur. Spirit obviously does not advertise one if, indeed, it exists. I am without a $300+ battery. As a handicapped senior I cannot afford to buy one that was damaged–correct that to broken beyond repair– through the fault of Spirit. Because I value my independence I always traveled with three since their “life” is limited without recharging. Now without the auxiliary, I am virtually homebound.
    If anyone can suggest how I can get the attention of Spirit so this claim file can be closed, I would most appreciate it. I am willing to try almost anything and everything.
    Thank you. (At least I got to vent my frustration!)

  2. Yes, definitely … I had a major problem with Spirit some four years ago, and there is an ombudsman who writes both for National Geographic and the New York Times, and he contacted the right people to resolve my problem with literally minutes to spare before I had to leave for the airport. (From the time I emailed him to resolution took under 18 hours. Amazing!)

    His name is Christopher Elliott, and you can find him by googling “fix my trip”.

    Let me know what happens. The man works wonders.

    Cathy
    Santa Barbara

  3. Hey I have to question the 2001 route map as acorrding to Wikipedia Spirit Airlines didn’t start service to San Juan until November 2001 yet you claim the route map is from January 19th of that same year so please respond on this issue. Thanks

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