Thursday, December 27, 2018

From Tardy to On-Time: Spirit Airlines Tries to Shed Old Image: Fliers still have gripes, but CEO says, ‘We’re shedding some of the negatives we earned’

The Wall Street Journal
By Alison Sider
Dec. 27, 2018 9:00 a.m. ET

Spirit Airlines Inc.,  once the most likely to show up late or cancel a flight, is trying a new tactic: punctuality.

Spirit was on time more often than any other U.S. airline in October, according to the latest available government data. This year its flights have been on time nearly 81% of the time, besting rivals including American Airlines Group Inc. and United Continental Holdings Inc.

Fliers still gripe about Spirit to the federal government at a higher rate than they do about almost any other airline. But the complaint rate in the first nine months of this year was down 75% from the same period in 2015, the first year the government tracked such figures for Spirit.

Spirit’s business remains based on the idea that fliers will choose the cheapest fares over reclining seats, seat assignments or water. Its strategy to charge for anything beyond a ticket brings in around half its revenue and still irks many passengers. The data, however, suggests the airline is starting to turn around a reputation for providing terrible customer service.

“We’re shedding some of the negatives we earned—justifiably earned—five or six years ago,” said Chief Executive Bob Fornaro.

Spirit told investors in November that it expects to notch year-over-year unit revenue growth of 11% in the fourth quarter, more than triple what Delta Air Lines Inc. is anticipating. Spirit’s shares are up more than 28% this year, while most other airlines’ stocks have languished.

The airline, along with other low-cost counterparts, also has helped set fares across the industry. Spirit’s rapid expansion into places such as Dallas, Los Angeles and Chicago, for example, quickly pressured airlines including Southwest, American and United to often match its bargain-basement prices.

As many big airlines have also started charging fees for extras like checked luggage and seat assignments, some fliers are willing to give Spirit another look.

“How much worse can Spirit be? Let’s give it a try,” Judi Anderson, 70, said when she was looking for an inexpensive fare from Florida to New Jersey this year. She and her husband brought their own bottled water. “It was bare bones, and that’s what we expected,” she said.

For years, Spirit’s former chief executive, Ben Baldanza, argued that cheap fares were the best form of customer service. He said Spirit’s customers needed to lower expectations.

But its network grew faster than its fleet, straining operations. Just 69% of its flights arrived on time in 2015. Chronic delays and cancellations mean overtime costs for crew as well as hotels and new flights for stranded passengers.

The reputation for shaky service became a burden, as competitors aggressively slashed fares to match Spirit prices. Unit revenues, a closely watched metric of how much it takes in to fly a passenger a mile, took a hit. Spirit shares fell from a high of over $84 in 2014 to around $40 by the end of 2015.

In early 2016 Spirit’s board decided to make a change at the top, bringing in Mr. Fornaro, a board member who previously ran discounter AirTran Airways, before Southwest Airlines bought it in 2011. He vowed to make Spirit’s pricing more transparent and slow the airline’s growth to make the airline more reliable and mend relations with customers.

Spirit retrained flight attendants and other employees and tempered some of the most draconian policies, like charging customers $100 for showing up with a carry-on they hadn’t paid for in advance. It charges $65 now. Spirit tied executive bonuses more closely to on-time performance and reductions in customer complaints.

To start running on time more regularly, Spirit adjusted how it schedules aircraft and crew, including building in more time for some flights and turnarounds as a buffer against the unexpected. “Spirit had to slow down to go fast,” said Jose Caiado, an analyst at Credit Suisse.

Earlier this year Spirit and its pilots agreed to a new contract, which raised pilots’ wages, aligns more closely with industry standards and gives the carrier more flexibility in scheduling.

Some things are unlikely to change. Spirit’s seats are close together and don’t recline, which makes room for extra rows. The airline charges extra for everything from carry-on bags to water. Unlike major carriers with dense networks of interconnected hubs, Spirit operates just one flight a day or fewer on many of its routes, and passengers can be left in a lurch. Spirit still bumps more fliers than other carriers, according to government figures, though the airline said it recently made changes to address that problem.

Blakely Sanford, a tax accountant from San Diego, said the last leg of his flight home from a cruise in November was delayed multiple times before being canceled. He and the other passengers were told they wouldn’t be able to fly out until the following evening.

“They offered to let me sleep on the airport floor,” he said. He got a refund and rented a car to drive home. “I don’t care how cheap it is, I will never again go on Spirit,” he said.

Others are reconsidering the airline. Friends of Csonka Ferguson, 41, convinced her to give Spirit another shot for a one-day trip a few months ago. “It was just seamless,” she said.

Original article can be found here ➤


Anonymous said...

“They offered to let me sleep on the airport floor,” he said. He got a refund and rented a car to drive home. “I don’t care how cheap it is, I will never again go on Spirit,” he said. Yeah, he'll be back. Another bare bones fare promotion - he'll get sucked again

Anonymous said...

Imagine being proud to show up for work on time 81% of the time, what would your boss say?

Anonymous said...

^ I think that puts you up for promotion in a federal job.