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Spirit Airlines Targets Subprime Credit Flyers with Loyalty Program Expansion

Spirit Airlines Targets Subprime Credit Flyers with Loyalty Program Expansion
Joe Cortez

Ultra-low-cost-carrier Spirit Airlines wants to extend frequent flyer program financial products to flyers who do not have great credit scores. Working with three banking partners in two continents, the airline is preparing a major expansion of the Free Spirit program, including adding benefits to the airline’s “$9 Fare Club.”

Spirit Airlines is preparing for a major expansion of their loyalty program in 2021, which includes targeting frequent flyers with subprime credit and adding new benefits to the “$9 Fare Club” loyalty product. In a filing with the U.S. Securities and Exchange Commission, the Florida-based airline announced a number of changed plans with the goal of expanding their earnings from non-flying activity.

Free Spirit Partners Grow to 15, Including Bank of America and CreditShop

Although the airline is known for their low fares paired with ancillary fees for everything from selecting seats to bringing on additional luggage, their earnings from their loyalty offerings are growing. Between 2015 and 2019, the total number of members who pay between $59.99 and $69.99 to join the “$9 Fare Club” experienced a compound annual growth rate of nine percent. Moreover, subscriptions earned the airline a total of $63.7 million. All members are part of the airline’s Free Spirit loyalty program.

In January 2021, the airline will offer additional benefits for those who pay to be part of the discounted airfare club. The additional benefits include shortcut boarding and the Flight Flex itinerary modification product. The airline did not say when these benefits would be finalized, or how they would be offered to members of the club.

Encouraged by the growth of their loyalty offering, Spirit has increased the number of partners in the Free Spirit program to 14 – most notably, Bank of America, CreditShop and Promerica. While Bank of America offers the airline’s co-branded credit card, their relationship with CreditShop will focus on offering a co-branded credit product to flyers who have subprime credit. Promerica will expand Spirit’s co-brand credit card to Latin America.

“In addition to Bank of America, some of our largest Free Spirit Program Partners include CreditShop…for prospective members of the Free Spirit Program in the United States that are considered to have a FICO score of below 680,” the airline writes in their SEC filing. “The new agreement with CreditShop is also expected to provide enhanced loyalty-based cash flows to Spirit by expanding the number of co-branded credit card holders.”

So far, the credit card programs have provided a needed boost to Spirit’s bottom line. At the end of 2019, the airline made $49.4 million on their co-branded credit cards – but expect that line of business to grow to over $100 million by 2024. Additionally, the airline hopes to bring in $200 million from their $9 Fare Club by 2024.

Spirit Wants to be “The First Profitable Airline” Post COVID-19

The moves reinforce Spirit’s plan to become “the first profitable airline” once the COVID-19 pandemic comes to an end. During their second quarter financial reports, the carrier said their ultra-low-cost model allowed them to reposition as travelers began flying once again, while claiming to achieve “break-even” on their burn rate in the month of June 2020.

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