Now that doesn t mean that everyone who flies Southwest would save money flying on Spirit. Because i

After we published our story on the Spirit Effect a couple of weeks ago, Spirit Airlines Media Team reached out and asked if we wanted to do a Q A session with Spirit Airlines CEO Ben Baldanza to discuss the story and other parts of Spirit s business model. The interview below discusses The Spirit Effect, Spirit s business model, Southwest Airlines, and other topics. The text has been lightly edited for ease of reading purposes rental cars for sale in salem oregon only.
Baldanza: Well we ve shown some data publicly rental cars for sale in salem oregon before in some markets where we ve seen generally rental cars for sale in salem oregon about a 25 to 45 trade-off. Meaning that when we lower fares by 25%, we ve seen traffic increase in the 40-45% range. And we empirically have seen that in a lot of markets we ve done. And while that’s not true in every case; we don’t necessarily plan for that exact kind of stimulation – when we think about Spirit approaching the marketplace, versus the status quo – we tend to think of getting our prices in the 20-25% rental cars for sale in salem oregon range lower than the status quo and that generating a good amount of traffic. And we decide where to fly, basically, in markets where we think enough new traffic will be created to fill our airplane; enough to justify our capacity. rental cars for sale in salem oregon So we decide to fly whether to fly once a day, or 4 times per week, or 2 trips a day, whatever, based on how big the market is and how much we think we can stimulate it. Because we’re not in the game of trying to steal traffic from anyone. We’re in the game of trying to create new traffic with low fares, rental cars for sale in salem oregon and using that to fill our airplanes.
Vinay: Do you have any data on customer retention rates. I know one of the things that drove the Southwest Effect was their ability to retain customers and win repeat business. So do you have any data or empirical observations on how you do at retaining customers?
Baldanza: We have some data around the edges of that. What I don’t have for you is a survey done in the last six months that says this many percent of our customers said that “I will absolutely fly with Spirit again,” but I can give you some data around this. Number 1, the load factor on flights that we ve flown more than a year is higher than flights that we ve flown less than a year. And that in and of itself doesn t tell you it’s the same people flying us again, but it does tell you that the longer we fly in a market, the busier we get. So if we were just churning through customers, that wouldn t always be true, but it seems to always be true. So that’s one point. Another rental cars for sale in salem oregon point is that we have two kinds of loyalty programs in the company. So we have our frequent flyer program called Free Spirit, that is really built around the credit card economics. Then there’s our 9 Dollar Fare Club which is a Sams Club, Costco kind of model , where you pay an annual subscription fee and in exchange for that you get to buy lower priced tickets rental cars for sale in salem oregon throughout the year and you get discounts on your baggage fees. And so we have a better way to track behavior through people who are in those programs, than people who aren t.
And the first thing I’ll tell you is that we ve seen sustained increases in subscription to the 9 Dollar rental cars for sale in salem oregon Fare Club. And so why on earth would somebody be paying us $60 a year [for the 9 Dollar Fare Club] if they didn t plan to fly us multiple times? There’s not many cases where a single purchase pays for that club, and often you need to fly 2-3 times within the year to make it worthwhile. And yet, people keep joining, people keep renewing. And that’s another around the edge data point that tells us people keep flying us, people keep coming back. And in the frequent flyer program, the frequent flyer program continues to grow. And more and more people join. And again, why would you be building loyalty within a program if you didn t believe in the product and were willing to use the product.
rental cars for sale in salem oregon The most anecdotal thing I’ll tell you, is we have a meeting quarterly with all of the station managers at Spirit. And, even in the places where we outsource rental cars for sale in salem oregon the production work, meaning rental cars for sale in salem oregon the workers at the ticket counter and on the ramp might work for another company that works as a contractor for Spirit – even those places we tend to have the station manager as a Spirit employee. So we have one Spirit employee in virtually every station we fly. We meet with those people regularly, and we bring them all into headquarters at Fort Lauderdale regularly, rental cars for sale in salem oregon to discuss the business, and new initiatives and things. And the last couple rental cars for sale in salem oregon of meetings, a couple meetings ago, and I continue to hear this now, I said – “We get questioned a lot from investors and from media about whether or not we get a lot of repeat business. Do you guys think we get a lot of repeat business?” And I was amazed at the overwhelming sort of – “Oh my god! Of course! We know everybody!” and “I work in Fort Meyers and half the people, they come up to the counter and say ‘nice to see you again’” or “I work in Atlantic City and we know everyone in the town, and they love us.” and “I work in St. Thomas and I see the same people come in at the same time every year and they say nice to see you again.” And we here those comments all over the place.
And so the people in our stations say they know the passengers because they see the same people all the time. People are increasingly joining our two different loyalty programs. The more we fly in a market, the busier we get. So all of things, while none of them directly say that I can tell you that x% of our customers fly us a second, third, or fourth time. All of them tell us that we don’t have a retention problem. We believe rental cars for sale in salem oregon customers fly us, and they come back because the fare is [still] low the next time, and their experience wasn t so miserable the first time that they say, “you know for the 20, 30, 40, or 100 bucks I’m saving, it’s absolutely worth it for the money.”
Vinay: When we posted the Spirit Effect story on Social Media, and it s slowly spreading across the internet, the one sort of angry comment or feedback we’d get is someone saying Spirit has awful service, or something along those lines. So could you discuss the “un-bundled” business model in a little more detail and respond to passengers who complain that the Spirit Effect isn t valid because Spirit has what they call “poor” customer service?
I’ll talk to you about the types of things customers complain about also. And some we are more concerned about than others. The types of complaints that the media tends to report on as our poor customer rental cars for sale in salem oregon service tend to be mostly in a couple different areas. One is just the fact that we charge incrementally for a lot of things, and we charge for carry-on bags, we charge for baggage, and our overweight baggage fee kicks in at 40 pounds, whereas most airlines are at 50 pounds – those kinds of things. They often refer to those things as hidden fees even though rental cars for sale in salem oregon they’re not hidden at all. Or they refer to them as a bait-and-switch kind of tactic. I think that’s more media hype than it is perception. And when you use DOT data, if you look by market, what Spirit customers actually pay; their fare plus optional fees – in almost every case they’re paying less on Spirit than they would have paid on another rental cars for sale in salem oregon airline.
And when you use DOT data, if you look by market, what Spirit customers actually pay; their fare plus optional fees – in almost every case they’re paying rental cars for sale in salem oregon less on Spirit than they would have paid on another rental cars for sale in salem oregon airline.
Now that doesn t mean that everyone who flies Southwest would save money flying on Spirit. Because if you’re rental cars for sale in salem oregon flying with a family of four carrying 6 bags, you’re probably better of flying Southwest because you probably would have too many bag fees at Spirit which would make it too expensive. But if you’re a family of four who’s carrying 3 bags or 2 bags, your fare’s going be cheaper on Spirit because 2 of the 4 of you aren t paying for 2 bags, and at Southwest you’re all paying for 2 bags in your fare. So the customers who fly Spirit, select rental cars for sale in salem oregon Spirit because they pay less than on other carriers. So the average fare they pay tends to be less than your next best option. So in that sense, the whole hidden rental cars for sale in salem oregon fees bother us thing, rental cars for sale in salem oregon is more just noise – in that, the customer that’s really bothered by that can do something else. They don’t have to fly us – they [our passengers] buy us because they save money. And that’s the reason they buy us. They don’t buy us [Spirit] because it’s a palatial experience or a deluxe experience – they buy us because they save money.
rental cars for sale in salem oregon The second thing they complain about is about our seat pitch – our seats don’t recline, they’re fairly tight in the sense that the seat in front of you is fairly rental cars for sale in salem oregon close to you. And we don’t give you anything to eat or drink on board unless you buy it. So the on board service is thought rental cars for sale in salem oregon of as relatively severe in that sense. But to that end, we ve got to do a better rental cars for sale in salem oregon job of explaining to people how those things get you the really cheap low fares. Let me use kind of an obnoxious analogy for you. You know what Chik-Fil-A restaurants are? No one walks into Chik-Fil-A and complains that they don’t sell Hamburgers. If you want a hamburger for lunch, you don’t go to Chik-Fil-A. People love Spirit rental cars for sale in salem oregon because our fares are so low. One of the reasons our fares are so low is we put more seats on the plane, so that allows us to spread our fixed costs over more seats so everybody pays less. So to complain about tight seats on Spirit, but wanting the fare – is like going into Chik-Fil-A and complaining that they don’t sell hamburgers. If you want more legroom – go pay for it at another airline that offers it.
There are other airlines out there, JetBlue being a big one, that sell legroom. They’re offering lots of legroom, more legroom in coach than anyone. Their fares are also about $50 higher than ours on average. If you want legroom, go buy legroom. If you want a hamburger, go to Five Guys. If you want chicken, go to Chik-Fil-A. What we sell is a low fare, they sell legroom. That’s a complaint like – I want Spirit