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Growing Spirit Airlines Prefers Texas Economy Over Florida's

Stocks in this article: AAMRQ.PK LCC SAVE

"We look routinely at the fares paid on every route we can fly," he said. "We look at demand compared to capacity: Is it over-served or underserved? With Charlotte/Dallas, you have to wait and see what the merged airline will do. Will they fly 20 times a day? Or will they pare down and squeeze yields? You have a lot of Dividend Miles and Advantage fliers, a lot of loyalty, on that route. It's too early to say what will happen."

Not only the growth strategy, but also the pricing model, runs counter to industry trends. Spirit appeals to passenger who want less, not more. It charges rock-bottom fares for seats and fees for everything else. In the first quarter, the average ticket revenue per passenger flight segment was $71.30, while the average non-ticket revenue per passenger flight segment was $52.73, meaning 42% of per passenger revenue was derived from fees.

Spirit can charge less for seats because it puts 178 of them on an Airbus A320, one below the Federal Aviation Administration limit. US Airways, the biggest A320 operator, has 150 seats on the same airplane, including 12 in first class. You needn't mention "first class" to Spirit executives. Baldanza insisted the carrier will resist the historic tendency of low-cost airlines to increase service levels as they seek higher ticket prices.

"In general, we are not going to consciously increase our costs in the hopes of generating higher ticket prices," Baldanza said. "We will never look to take seats out. We are not going to look to add TV screens. The historical implication is that everyone will have Wi-Fi and we won't. If we have Wi-Fi, it will be because some Wi-Fi provider pays us to put it on our airplanes."

-- Written by Ted Reed in Charlotte.

>To contact the writer of this article, click here: Ted Reed

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