THE LOWBALLER
Cut rate fares and sparse services were hallmarks of Spirit Airlines in the hands of Baldanza. Subpar for corporates, but mainline carriers had to compete on price. Thus emerged Delta's bemoaned "Basic Economy" fares. American and United to follow suit in 2016.
The unabashedly no-frills Spirit Airlines is unlikely to find widespread use as a preferred corporate carrier anytime soon. Its model, however, is a different story.
A frequent target of traveler ire, often by travelers who don’t grasp the model and are shocked by the associated fees, Spirit has built its business on ultra-low fares that include little more than a seat somewhere on the plane. Seat selection, carry-on luggage larger than a purse or small backpack and even a cup of water all carry an extra fee.
Led by president and CEO Ben Baldanza for the past decade until his resignation on Jan. 5, the company has forced other carriers to compete for comparison-shopping travelers. Delta Air Lines several years ago introduced a Basic Economy fare for select markets in which it competes directly with Spirit, and it began expanding the offering in late 2014. While not as draconian as a basic Spirit fare, Delta’s Basic Econ-omy fare precludes seat selection, ticket changes and complimentary upgrades for Medallion members.
American Airlines appears set to introduce a similar fare type this year. “Spirit at DFW is our No. 2 competitor, larger than either Delta or United,” American Airlines president Scott Kirby said during the company’s third-quarter 2015 earnings call. “In Chicago, they’re the No. 3 competitor. Given that 50 percent of our revenue is up for grabs in these markets and that these carriers have had so much success when they weren’t matched, we know that we have to match their fares.”
While they can suppress basic fares in booking tools, travel buyers worry about travelers booking them without understanding the restrictions. In fact, Basic Economy fares proved a rare area in which buyers leveled criticism at Delta in BTN’s annual Airline Survey in December.