Full article on forbes.com
The new chief executive of Spirit Airlines, Bob Fornaro, is vowing to soften the airline’s uncompromising approach to customer service, mimicking the charm offensive pursued by Europe’s Ryanair three years ago.
Spirit, Ryanair and other ultra-low-cost carriers (ULCCs) base their business models on an extreme interpretation of airline economics – stripping fares to the bone and imposing surcharges for all non-essential services. Whereas most airlines show flexibility over fee structures in order to build customer loyalty, ULCCs compete solely on price and use punitive penalties to influence passenger behavior.
The strategy clearly works: Spirit’s no-nonsense persona under former chief Ben Baldanza secured the lowest unit costs in the US airline industry (5.15 cents per Available Seat Mile). Its parsimony fed through to lower airfares, catalyzing price-sensitive demand and driving 30% capacity growth last year.
But the airline’s bad-boy image creates a different type of cost...