Spirit Airlines is cheap, and CEO Ben Baldanza's proud of it

ByGary Stoller, USA TODAY
June 21, 2009, 9:36 PM

— -- For a company as controversial as Spirit Airlines, one might expect someone as flamboyant as Virgin Atlantic Airways' Sir Richard Branson at the helm. That's not Ben Baldanza, 47, the CEO of Florida-based Spirit, which bills itself as the country's first "ultralow-fare" airline.

Unlike Branson, whose escapades have included hot-air ballooning across the Atlantic Ocean, Baldanza's idea of a good time is playing board games at home with his wife, Marcia, and 2-year-old son, Enzo.

"We're more 'staycation' kind of people," says the career airline executive, who owns about 1,700 board games.

Baldanza says very little of his personality is part of the brand and image of Spirit, a private airline known for loud ad campaigns with sexual innuendoes, ads in passenger cabins and on flight attendants' aprons, and, most of all, very cheap airfares. A typical one: $54 one way from Fort Lauderdale to Freeport, the Bahamas.

"We're a small airline, so we have to be a little different, a little avant-garde," says Baldanza, who received a master's degree in transportation economics from Princeton University and previously worked at US Airways, Continental, Northwest and American airlines.

Spirit has kept its costs lower than most airlines, which has enabled it to squeeze out a $17 million profit during this year's first quarter — when other carriers were swimming in recessionary red ink. In 2008, it reported a $16 million loss, much smaller than most competitors.

Spirit flies to 39 cities with 28 new Airbus jets and has aggressively expanded into Latin America and the Caribbean in recent years. It has 53 daily departures from Fort Lauderdale, and about 10 from Detroit and New York's LaGuardia airport.

It's a leader in à la carte pricing that has swept the industry, charging extra for almost everything. Baldanza proudly says Spirit was the first airline to charge for a checked bag and "to stop pouring water for free."

Its sales policies and customer service, though, have enraged many fliers and put the carrier in hot water with government regulators.

The Transportation Department fined Spirit $40,000 in December for failing last summer to include certain fees in the base fare advertised on its website. The department also receives more complaints about Spirit than some bigger airlines.

"Our complaints are statistically much higher," Baldanza admits, "but compared to the number of people traveling with us, it's a tiny drop in the ocean."

'McDonald's of the airline industry'

Spirit carried 6.8 million passengers last year, and the Transportation Department received 792 complaints. That's more than triple the number of complaints against low-fare airline Southwest, which carried 102 million passengers. The largest number of Spirit complaints were for baggage, reservations, ticketing and boarding problems. Spirit also received a large number of complaints about customer service and refunds.

Baldanza says more than 99.9% of Spirit's customers are satisfied with their dealings with the airline and blames many complaints on fliers' expectations.

"We're the Wal-Mart or the McDonald's — not the Nordstrom's — of the airline industry," Baldanza says. "No one walks into McDonald's and gets disappointed when they don't see filet mignon on the menu."

Consumer advocate Kate Hanni says Spirit's problems with fliers cannot be explained away so easily.

"They are the absolute worst airline in the country," says Hanni, executive director of FlyersRights.org. "If it costs a little more, take the other airline."

Among other problems, Hanni says, three flights from Fort Lauderdale to Atlantic City were diverted to Philadelphia because of bad weather in mid-May, and passengers called police after not being allowed to disembark for many hours.

If any Spirit passengers feel they've been treated badly, "They should fly someone else," Baldanza says. "That's the way the free market works," he says. "I don't eat at some restaurants when I'm treated badly. Our job is to make sure that doesn't happen to a majority of customers."

Two years ago, Baldanza accidentally replied to an e-mail from a customer requesting a refund for missing a concert in Atlanta after a flight delay.

"We owe him nothing as far as I'm concerned," Baldanza said in his e-mail. "Let him tell the world how bad we are. He's never flown us before anyway and will be back when we save him a penny."

Baldanza's statements were ridiculed on Internet blogs, but Spirit is not backing down.

The customer paid $73.50 for two round-trip tickets between Orlando and Atlanta, and the flight to Atlanta arrived three hours late because of a weather delay, says Spirit spokeswoman Misty Pinson. The customer demanded $375 to cover the cost of airline tickets, a hotel room, a rental car and concert tickets, and rejected Spirit's offer of a $200 travel credit.

"Spirit went above and beyond in its offer to compensate this customer — despite having done nothing wrong — and the customer continued to make threats and refused to accept Spirit's more than generous offer," Pinson says.

Success mixed with complaints

Some flight attendants and pilots may be as disgruntled with Spirit as some of its customers.

The Association of Flight Attendants union in January opposed a series of Spirit airfare ads that it said degraded and demeaned women and flight attendants.

One campaign ostensibly referring to deep discounts proclaimed, "We're proud of our Double-Ds." Other campaigns mentioned "threesome sales" and "red-light specials."

Sean Creed, chairman of the Spirit chapter of the Air Line Pilots Association union, says Spirit pilots agree with the flight attendants. "Mr. Baldanza's approach to advertising is similar to his approach to labor relations," Creed says. "He will do or say anything, if he believes it will help make the company profitable."

Baldanza says Spirit has cut its marketing and distribution expenses by more than 80% during the last three years "by using edgy, viral marketing." The savings have resulted in very inexpensive fares, he says.

Spirit's advertising "may be more colorful than some," but it isn't "out of the norm" when compared with many retailers' ads, Super Bowl commercials and the content of TV series, Baldanza says.

Attendants dislike apron ads

The flight attendants union said it opposed a proposal by Spirit management to make flight attendants "walking billboards" by requiring them to wear aprons with a Bud Light logo. Spirit consulted with union officials before the launch of the aprons and received no objection, Baldanza says. Atlantic City is now the apron advertiser.

In May, the airline's pilots voted to authorize a strike if negotiations don't result in a new contract. The pilots' contract became amendable two years ago, Creed says.

Baldanza, who was COO of Latin American airline Taca and a member of Denver-based Frontier Airlines' board in the late 1990s, says labor-management disputes are typical of any company.

Creed, a Spirit captain, says pilots were very hopeful when Baldanza left his position of senior vice president of marketing at US Airways in 2005 and was named Spirit's president and COO. They thought Spirit would grow and prosper under the guidance of an experienced executive from a major airline.

Baldanza "has had some success on the marketing side, but the operational side is a disappointment," Creed says.

Some airline experts, though, have a very different view of Baldanza and his airline.

"Ben is a brilliant CEO," says Paul Dempsey, who served with him on the Frontier Airlines board of directors. "So long as an airline is profitable and safe, it is successful. Too many airlines lose money."

Spirit offers "a solid product called basic air service," says aviation consultant Michael Boyd. "That's what people buy the ticket for — to get to point B, not have a hootenanny with airline employees."

Boyd says Spirit has found a low-fare niche.

"Survival means focusing on a niche and going for it like a pit bull after a T-bone," he says. "That's what they're doing. It's good business."

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