Other North & South America Frequent Flyer Programs - Letter to Spirit CEO Ben Baldanza & His Responce

First is my letter to Spirit about having a forum:


February 8, 2012


DeAnne Gabel
Director Investor Relations
Spirit Airlines
(954) 447-7920
investorrelations@spirit.com


Dear Director Gabel,



I am writing to you today, because I need your help with a project I am working on, with an airline forum. For over six years, (Mar 31, 06---Feb 7, 2012) the motion to create a Spirit forum on Flyertalk.com has been tabled. This week I have been able to get this issue to voted on by the Flyertalk Board, after being in limbo for six years. In that time, airlines such as JetBlue, AirTran, Virgin America, AirBerlin, etc., have been able to get their own forum; while Spirit has been denied.

Now, your airline is VERY controversial on Flyertalk due to it's fees and practices; thus, this is going to be a difficult battle. My premise is going to be that Spirit is an important carrier, that deserves the forum, rather it is liked or not. The problem is in many ways, this is the Rodney Dangerfield of Airlines; ie., Spirit gets no respect! By now you can see my challenge, perhaps yours as well.

Any help your organization and management can give me, to present to the Flyertalk community about the airline, its principles, its purpose, company philosophy, etc., would be greatly appreciated. If your Chairman, Ben Baldanza could write a short letter or similar it would be a great help. Your is an often misunderstood airline, that could possibly through Flyertalk, at least be able to explain how it does business. The public (& Media) are often amazed/troubled by your policies and ad campaigns. I believe Flyertalk would be a great place for your company to be better understood.


Sincerely,

Ben Baldanza
Chairman & CEO
Spirit Airlines
(954) 447-7920
BaldanzaB@spiritair.com


Dear Chairman Ben,


I wanted to update you on my project to get Spirit its own forum on Flyertalk. Unfortunatelythe vote went against us, with the Talkboard voting 3-6 against the new forum. My understanding that your experience in the industry, included time at US Airways; which perhaps you have heard of Flyertalk.com from your time there. This is my primary airline, however I like Spirit for it's coverage throughout Latin America.

Through my time with your airline, I have a few suggestions that I think would be profitable for your airline and please your customer base. Most people whom write to you have a complaint, but I am happy with the experiences I have had with you. Now on to my suggestions:

1. You have a bundling option with your beverages, why not one with Big Front Seat, checked luggage, and one round of beverages; in one pre-departure upgrade price.
2. Expand your credit card program to include a Secured Visa option like Aero Mexico, Korean, LAN, or Tacca/Avianca. This along with a Spirit Visa/Mastercard Debit card option would benefit many in your customer base, while expanding the Spirit brand.
3. Introduce an optional fee, that allows the customer to change their tickets, if needed.
4. Add an insurance fee option (which Spirit would pay directly) for weather delays, etc., which would cover hotel & other key costs.
5. Have the FreeSpirit program introduce an option to buy miles.
6. Provide an fee option for double miles & extra miles for Big Front Seat.
7. Explain what the two upper-tiers in the FreeSpirit program are and what they do.
8. expand your fee dining program for your longer flights, LIMA/LOS VEGAS/LAX etc.
9. A fee based Spirit Club in FLT & MCO.
10. The ability to upgrade and pay fees using miles.


Just some Ideas I had for you and your innovative airline. Have the best of weekends!


Sincerely,

Dear George,



Thank you for your note, and thank you for your business too.



I am very familiar with Flyertalk, and was sometimes the “whipping boy” for the US Airways forum during my time there.



Before responding to your list of ideas, let me first give you a short background on Spirit since 2006. Up until that point, Spirit had never made money. In 2006, we decided, based on a study of airlines around the world, that we would change our business model to compete on the basis of price, and price alone. In other words, we would not spend money to develop a physical product that may attract a certain type of customer, but instead will build the airline to be profitable with the lowest possible fares. Our theory was that if we have the lowest fare, enough customers would care about that to fill our planes, even while we may be disenfranchising certain segments of the traveling public. Well, this has worked for us as Spirit has been profitable since 2007, we are growing, and as you probably know has a successful IPO in 2011. This background will help put into context some of my responses below.



1. You have a bundling option with your beverages, why not one with Big Front Seat, checked luggage, and one round of beverages; in one pre-departure upgrade price.



We’ve considered this idea, just as McDonalds offers “value meals.” It creates some serious costs for us, however. Consider that, with this in place, we now need to train our agents to evaluate the type of ticket purchase before deciding if they need to charge for the bag. That means we need a system that can allow them to waive the bag fee. Onboard, now the flight attendants have to distinguish who gets a free drink and who must be charged. Again, more training and a handheld system that lets them track unpaid inventory in addition to paid inventory.



We used to be a two-class airline. When you bought “first class”, you got free drinks , early boarding, and at that time we didn’t charge for bags. When we went to a single-class cabin but kept the “big front seats”, we have effectively maintained most of the first class revenue (not all, of course) but removed all of the costs of providing this service. In this way, we can offer the premium seat for the lowest possible cost.



So, I don’t see a way to add this feature without raising our costs. And higher costs to provide an option for some means higher ticket prices for all. You can get all of what you ask for at Spirit by paying individually for each item. That allows more people to take advantage of the service. Sometimes, for example, you will want a big front seat and won’t be checking bags, so why should we make you pay for bags on that trip?


2. Expand your credit card program to include a Secured Visa option like Aero Mexico, Korean, LAN, or Tacca/Avianca. This along with a Spirit Visa/MasterCard Debit card option would benefit many in your customer base, while expanding the Spirit brand.



We are exploring this with Bank of America now. The economics of the secured programs are a bit different, but we like the idea.




3. Introduce an optional fee, that allows the customer to change their tickets, if needed.



Whoa, this is a slippery, slippery slope. We effectively have this fee, you just think it is too high. We call it a “change fee”! Who would pay this fee? Only someone who felt it likely that they may have to change. Insurance providers call this “adverse selection”, meaning that the only people who would take it are the ones who will use it, ensuring that we raise our costs.




4. Add an insurance fee option (which Spirit would pay directly) for weather delays, etc., which would cover hotel & other key costs.





This is a risk that we cannot control, so if we were to offer this it would have to be through a third party that would be willing to insure against these uncontrollable risks. My guess is that the premium would be much higher that people would be willing to pay to make this work. We’ll speak with Travel Guard, our current travel insurance provider, about it though.




5. Have the Free Spirit program introduce an option to buy miles.



We do, we just call them tickets. Ha, I know this isn’t what you meant. The best way to get more miles in your Free Spirit account is to use your Bank of America MasterCard for more purchases. This is the only card in the industry right now that gives 2 miles for every dollar purchased.


6. Provide an fee option for double miles & extra miles for Big Front Seat.



The Big front Seat is just that – it has, and won’t get, and other product features bundled with it. That would make it a product. It is just a big seat and a lot of people like that.


7. Explain what the two upper-tiers in the Free Spirit program are and what they do.



I’ll have to get back to you on this as I don’t know the full answer off the top of my head..





8. Expand your fee dining program for your longer flights, LIMA/LOS VEGAS/LAX etc.



We treat onboard as a profit center, or as a retail store. It is not part of our “product”, as our product is a low fare. The largest expense in catering an airplane is actually bringing food and drinks to the airplane. Today, we do this just once a day. Having fresher options would likely require we do this more often, and that could significantly drive up our costs. That said, we are working with Gate Gourmet to find ways to improve our onboard service options but only so that our onboard store stays profitable. We see no reason to lose money with onboard service. It’s an option, not part of the product.




9. A fee based Spirit Club in FLT & MCO.



Only if the club exists and we could get a piece of the fee you pay for using it. In other words, we are not going to commit to the real estate cost for a club that has speculative revenues. Guaranteed costs + uncertain revenues = a no go for our business model, as it has the risk to raise all of our fares when the product doesn’t cover its own costs.


10. The ability to upgrade and pay fees using miles.



If you’re willing to pay to get miles to upgrade, just pay for the big front seat whenever you want it! It’s only a seat assignment charge and is often very reasonable. Since it is not a cabin or a product, there is nothing to upgrade too. Every seat on our plane has a price if you choose to sit there, these seats just have a slightly higher price. Our frequent flier program does not have the concept of upgrades in it and, I realize you won’t like this, but it never will either.







I really appreciate this note, George, and my goal in answering these in this detail was to give you a better sense of how we are running Spirit today. Essentially, we run Spirit like anyone would run any business, and it is surprising that most airlines don’t think this way. We realize that we aren’t for everyone, but also like the fact that we provide a different option and opportunity for those who can take best advantage of what we do. Sometimes I shop at Nordstrom and sometimes at Wal-Mart, but I don’t expect either to be like the other and I’m happy that both exist.



Have a good weekend,



Ben

George,



In follow-up to my last note, here is the detail on the top tier Free Spirit levels:



The two things that top tier status gets you in our program are the ability to redeem off the lower priced awards, and you get 100% credit for all miles flown. People who just join the program get only 50% mileage benefit and are limited as to the level of awards they can redeem.



I should note, however, that you can also “unlock” these benefits simply by getting and using our credit card.



Thanks again,



Ben

IMO I wouldn't want a NK lounge because everything in it would cost money.
Ben Baldanza
Chairman & CEO
Spirit Airlines
(954) 447-7920
BaldanzaB@spiritair.com


Dear Chairman Ben,


I wanted to update you on my project to get Spirit its own forum on Flyertalk. Unfortunatelythe vote went against us, with the Talkboard voting 3-6 against the new forum. My understanding that your experience in the industry, included time at US Airways; which perhaps you have heard of Flyertalk.com from your time there. This is my primary airline, however I like Spirit for it's coverage throughout Latin America.

Through my time with your airline, I have a few suggestions that I think would be profitable for your airline and please your customer base. Most people whom write to you have a complaint, but I am happy with the experiences I have had with you. Now on to my suggestions:

1. You have a bundling option with your beverages, why not one with Big Front Seat, checked luggage, and one round of beverages; in one pre-departure upgrade price.
2. Expand your credit card program to include a Secured Visa option like Aero Mexico, Korean, LAN, or Tacca/Avianca. This along with a Spirit Visa/Mastercard Debit card option would benefit many in your customer base, while expanding the Spirit brand.
3. Introduce an optional fee, that allows the customer to change their tickets, if needed.
4. Add an insurance fee option (which Spirit would pay directly) for weather delays, etc., which would cover hotel & other key costs.
5. Have the FreeSpirit program introduce an option to buy miles.
6. Provide an fee option for double miles & extra miles for Big Front Seat.
7. Explain what the two upper-tiers in the FreeSpirit program are and what they do.
8. expand your fee dining program for your longer flights, LIMA/LOS VEGAS/LAX etc.
9. A fee based Spirit Club in FLT & MCO.
10. The ability to upgrade and pay fees using miles.


Just some Ideas I had for you and your innovative airline. Have the best of weekends!


Sincerely,

The best thing would be to allow online search and booking of awards rather than the opaque BS and Indian phone agents

I'd like to see NK take out the big front seats and replace them and a few more rows with a more legroom product. Just like the price each seat on the plane anyway, they would just need to set those seats a little higher. When I look for flights with NK, I only look for exit row or big front seats or I won't fly with them. I'm sure many other people would pay a little more for standard or extra legroom.

I'd like to see NK take out the big front seats and replace them and a few more rows with a more legroom product. Just like the price each seat on the plane anyway, they would just need to set those seats a little higher. When I look for flights with NK, I only look for exit row or big front seats or I won't fly with them. I'm sure many other people would pay a little more for standard or extra legroom.


I just sent a thank you letter to Ben and I said just the same, that i would not fly Spirit without the Big Front Seat option. I only wish JetBlue offered the same thing. Being in Orlando, that was the great thing about AirTran, was the Business option.

gkbiii... Thanks for sharing with us your exchanges with Ben, and a thank you also to him for being so timely and willing with his responses.

Forgive me for sounding naive, but is it really that easy to email airline CEOs? Especially one, in this case, who is dubiously famous for hitting "Reply All"... :eek:

aubreyfromwheaton... I am thinking of emailing Ben with exactly your suggestion, asking how in the world the airline can save money by having *people* respond to award requests. I am also thinking of asking him the reasoning behind the BS passenger usage fee, too...

Now that Baldanza's email has been posted on here, here's hoping he is not sent a barrage of angry emails from dissatisfied passengers!

It's interesting reading. Thanks for sharing it.

I'm not a Spirit fan -- I'd rather NOT fly them -- but I'm glad they exist. Sometimes, a trip is only practical with their super low fares, and I fly them in those circumstances. I'm now routinely seeing $300 minimum roundtrip fares from the Northeast to Florida. Something tells me I'll be on another Spirit flight fairly soon, as some of their fares are only $100.

The best thing would be to allow online search and booking of awards rather than the opaque BS and Indian phone agents

I do not enjoy the Spirit phone experience, especially when I know more about their miles program then they do. :rolleyes:

Sometimes, I think I am flying a different Spirit Air than other folks. I have had 2 flights canceled with them. First one in Lima, Peru. They put me up in the Sheraton and gave me free meals, transportation. Delay was mechanical.
Second one was in FLL. Delay was weather. I had the last flight out. They put me up in a Marriott Suites Property, food voucher and transportation. But the really amazing one was I was scheduled to go to Guatemala with my best friend. He was killed in a car accident weeks before departure. I not only got a refund, but a sympathy email from customer service. Today, I am flying to fll from atl on Spirit. No other carrier could come close to the $48.59 and $28.59 return including all fees and taxes. I don't buy water, seats, bag fees etc.
My one request to Ben would be to allow a stopover in FLL for a fee, much like Iceland Air does for Reykjavik, since it is a nice spot for a few days there or in the Keys. My rule for Spirit. Expect a tight seat and to arrive safely. Anything above that I consider a gift.

Sometimes, I think I am flying a different Spirit Air than other folks.

I hope this trend continues.

When they cancelled all those flights because of the strike they drove away a lot of people.

I can see Spirit becoming nearly as big as Ryanair as gas gets pricier and value becomes overwhelmingly important to leisure travelers as well as business owners.

Not investment advice...

I hope this trend continues.

When they cancelled all those flights because of the strike they drove away a lot of people.

I can see Spirit becoming nearly as big as Ryanair as gas gets pricier and value becomes overwhelmingly important to leisure travelers as well as business owners.

Not investment advice...

The flight from atl last night was slap full. First flight on new plane with no recline seats with 28 inch pitch. Seats sat comfortably. The gate area passengers looked like a Greyhound bus terminal waiting area.:rolleyes:

I hope this trend continues.

When they cancelled all those flights because of the strike they drove away a lot of people.

I can see Spirit becoming nearly as big as Ryanair as gas gets pricier and value becomes overwhelmingly important to leisure travelers as well as business owners.

Not investment advice...


The Spirit Holdings IPO may be one of the few airline stocks that will make omney in the future. Just think if you were part of the Southwest IPO when it came out.

Isn't their market cap over 1.35 billion now? That's more than US Airways... (and about 10x that of American)