AN UTTER LACK OF SPIRIT
By Joe Brancatelli
June 16, 2010 -- And now for something completely similar: An airline behaving badly.
Because it is small, you may not yet have heard that Florida-based Spirit Airlines has been shut down since Saturday. After more than three years of negotiations and a federally mandated 30-day cooling-off period, Spirit's approximately 450 pilots walked off the job. The airline then abruptly canceled all of its 150 or so daily flights and has been grounded ever since. As of Tuesday afternoon, Spirit said service through Thursday was canceled.
But "small" is a term of art in the airline business. Spirit represents about 1 percent of the nation's commercial-aviation capacity, which translates into a not insubstantial 15,000-plus passengers a day. Since the strike began, that means around 100,000 passengers have been stranded. And stranded is the operative word, since Spirit has taken the extraordinary step of abandoning its customers wherever they last flew them, maximizing their financial and transportation pain and blithely playing just inside the regulatory margins.
Even by the fast-and-loose standards of today's airline industry, Spirit's actions during and in the run-up to the strike is startling for its insensitivity to customers and disregard for the conventions of ethical business practices. For years, Spirit has been the P.T. Barnum of airlines--the carrier's management believes there's a bargain-hunting sucker born every minute--but its reaction to the strike has appalled even the most cynical observers of the airline scene.
Spirit's maneuvers began last month, when the National Mediation Board released the carrier and its unhappy pilots--airline contracts never technically expire, but become "amendable"--into the cooling-off period that must precede any strike. With a 30-day clock ticking, airlines traditionally create a "reaccommodation" policy that allows passengers in the path of a potential strike to change or cancel flights without penalty.
Spirit not only refused to formulate such a policy, it never warned existing or future customers that a strike was possible. No notice appeared on its website, and few if any customers were called or alerted by email. If a customer somehow stumbled on news of the potential strike, Spirit refused to allow any adjustments to their travel itineraries unless a change fee of $100 or more was paid.
As the strike deadline approached, Spirit began proactively canceling some flights for last weekend. That alerted some of the otherwise somnambulant beat reporters at the nation's newspapers and wire services. But rather than press Spirit chief executive Ben Baldanza or the carrier's hapless public-relations flak, the media gobbled up and regurgitated the Spirit line. The airline claimed it would fly through the pilot's strike, that it was arranging substitute flights from other carriers, and that it was making alternate arrangements for passengers with other airlines.
None of that was true, and the gullible media stenographers should have known it. No airline, of any size, has ever flown through a pilot's strike. Unlike flight attendants or even mechanics, who can be replaced by trained management employees, there aren't a lot of airline executives certified to fly aircraft. The fiction of arranging for other carriers to operate Spirit's flights? There's not a lot of free capacity in the market right now. Besides, since most pilots belong to the Air Line Pilots Association (ALPA), the strong pilot's union, the chances that other airlines would pick up Spirit's flying was slim. ALPA would brand (and has branded) the flying "struck work" and told its members not to fly the planes.
Spirit's claim that it was arranging to buy seats on other airlines to fly its passengers? Another easy-to-disprove claim. Spirit has no "interline" agreements with other carriers, which means it must buy tickets on the open market. If Spirit had actually bought a significant number of seats in bulk on competitors, the information would have leaked out.
As negotiations extended into overtime—the midnight deadline last Friday was extended for five hours—Spirit still did nothing to warn its passengers either by phone or email, nor did it post any warning on its website.
When the pilots walked off the job at 5 a.m. last Saturday, Spirit simply canceled its entire schedule for the day. Passengers arrived at airports around the Americas—Spirit flies to Central and South America as well as many U.S. destinations—and were told they were on their own. No help was available, no flights were planned, and Spirit would not help flyers with their alternatives. Moreover, since Spirit has none of those interline agreements, tickets purchased on Spirit are not honored by other airlines.
If passengers could find other flights—no easy task given that carriers are flying 80 percent or more full now—the prices were extremely high. For example, on one of Spirit's nonstop routes—Managua, Nicaragua, to Fort Lauderdale—the only other option is a flight with a plane change and long layover in Houston. The walk-up fare? About $1,000 one-way.
But it gets worse. For the first few days of the strike, Spirit canceled its daily schedule with only a few hours' notice. And since Spirit even now refuses to allow passengers to change or cancel future flights without a penalty, any Spirit flyer who tries to make alternate arrangements will first have to pay Spirit $100 or more just to get free of a flight that the airline hadn't yet canceled.
And it has also engaged in a tricky (if technically legal) practice with the revenue it collected from flights it has canceled. By law, of course, Spirit cannot charge customers for flights it doesn't operate. But that doesn't mean the airline is volunteering refunds. Instead, customers are issued a "flight credit" equal to the amount of the fare they paid plus a $100 "voucher" for the "inconvenience." Of course, the flight credit has caveats: It's only good for a year, and no other carrier will honor it.
Want the refund you're legally entitled to receive? You have to call Spirit directly and demand it, a process that is nearly impossible. I tried to call Spirit's customer-service line three times on Monday. Each time the wait exceeded 40 minutes before I hung up. Other reporters and some flyers say the wait time has exceeded four hours. (Of course, travelers can call their credit-card company and legally contest the charge, but not every flyer knows they have that right.)
Why would Spirit rub salt into their customers' wounds by making it nearly impossible to get the refund they deserve and—in many cases—may need to fund a replacement flight? Cash management, of course.
If the vast majority of the 100,000 or so travelers accept Spirit's scrip instead of fighting for a refund, Spirit gets to hold on to the fare dollars indefinitely. (The trade newsletter Aviation Daily reports that Spirit's average fare between Detroit/Metro and Las Vegas is $102 each way, so you do the math.) Moreover, there is the "breakage" factor. As with gift cards, rebate coupons, and the like, the Spirit flight credit will never be used by a certain percentage of passengers. The breakage rate could be as high as 25 percent, one expert in these matters told me.
If you're a sane businessperson, you might wonder what kind of folks run Spirit. What possible long-term benefit could there be for an airline to strand passengers, maximize their pain, and treat them like fools?
Well, the airline world is odd, and Spirit boss Baldanza's feeling about his customers is well known. In one widely reported incident, an internal email of his philosophy leaked out. His response to a flyer who received bad treatment on Spirit? "Let him tell the world how bad we are," Baldanza wrote. "He's never flown us before anyway and will be back when we save him a penny."
At least up until now, Baldanza and Spirit have profited from that customer-be-damned attitude. Spirit tells the government that it has turned a profit in each of the last three years, making it one of the country's only consistently profitable airlines.
The Fine Print…
Spirit's chairman is William Franke, whose Indigo Partners is the carrier's majority stakeholder. Franke formerly controlled America West (now a part of US Airways, where Baldanza formerly worked) and his most infamous tactic is legendary. He once called a flight back to America West's Phoenix hub even though it was already en route to its destination. He wanted the aircraft to serve a more-profitable charter flight. Passengers on the aborted flight waited hours before America West found them other transportation.
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
THE FINE PRINT This column is Copyright © 2010 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2010 by Joe Brancatelli. All rights reserved.