Paying for Using Plane Bathrooms? Spirit Air CEO Says No But Doesn't Discount New Fees

Spirit Airlines says new carry-on baggage fees help reduce overall fares.

May 06, 2010, 6:33 PM

May 7, 2010— -- Carry-on baggage fees? Check. Food and drink fees? Check. Checked-baggage fee? Check.

The list of fees that Spirit Airlines charges for its services has grown steadily over the years, and the airline's chief executive Ben Baldanza is vehemently unapologetic about it, or that planes will eventually have minimal leg room and no reclining seats or seat-back pockets.

"We charge you a really cheap fare and if you want to buy other stuff, we'll sell it, but that's your call," Baldanza said in an interview with ABC News. "You go into McDonald's and is it deceiving you're not going to be able to order filet mignon? No. You know when you go to McDonald's what you get."

Spirit became the first U.S. airline last month to announce that it would charge a fee -- ranging from $30 to $45 -- for bags placed in overhead compartments. The fee, which will take effect in August, caused an uproar in the airline industry and even in Washington, D.C., where some lawmakers called for regulation to prevent such moves.

But Baldanza argues the charge is misunderstood. By unbundling what the company considers to be unnecessary things -- food, blankets, luggage that needs to go into the overhead compartment -- Spirit can reduce base fares for all its passengers, Baldanza says.

"Our total price point is still lower than everybody else's and that's what matters," Baldanza said Thursday. "When our average [ticket price] is $100, it's hard to tell us not to do something when we're not the ones gouging everyone out."

Customers won't have to pay for medical supplies or baby food and milk, and they can take bags that will fit underneath their seat for free. That room, Baldanza argues, should be enough for people to take all that they need on the aircraft.

"16 by 14 by 12 is pretty large. You could carry a change of clothes, you could carry all your toiletries, you could carry a hair dryer, you could carry makeup, you can carry everything in that bag and it will fit in the seat in front of you and it's free," he said. "I don't think there is anything that you have to have in the plane with you on Spirit that you can't take for free."

Baldanza estimates the new move would take about 30 bags out of overhead compartments and into the checked-bag area, which in turn will save five to seven minutes per gate on delays.

"That's going to create almost 20 hours of new airplane time for us to schedule without having to go buy another airplane," Spirit's CEO said. "When we can find 20 more hours per day, think of how low the fares can be on those flights. That's what this is all about."

So does that mean Spirit will follow in the footsteps of European low-cost carrier RyanAir and also start charging passengers for using the bathroom?

"We think if it's necessary to fly then it should be in your base fare," Baldanza said at a meeting of the International Aviation Club Thursday. "We think bathrooms are pretty much necessary."

Spirit Airlines' Revenues Soar

At a time when most airlines are suffering from drop in revenues, Spirit has emerged as a leading low-cost carrier in the United States. The Florida-based carrier had record profits in 2009. Nearly 21 percent of its revenue -- about $146 million -- came from fees for baggage and ticket changes. Sales have risen by 60 percent since the beginning of the year.

Baldanza, who turned the company's fortunes around after taking over the helm in 2005, is unabashed about the idea that the airline is not for everyone.

"We're frills-for-a-fee carrier," he said.

Spirit's outspoken CEO said he takes pride in Spirit being different from other large "legacy carriers" and even welcomes the controversy.

Spirit's edgy ads last year drew a lot of negative publicity. One ad selling the company's flights to Latin America read, "Don't go South Without Protection." Another prompted customers to enjoy Spirit's "DD's" (Deep Discounts), and "MILF" (Many Islands, Low Fares).

Baldanza's response to media attention: Keep it coming.

"When Bill O' Reilly says how incensed he is that we're destroying American culture with our ads, but then he says Spirit Airlines has really low fares, everybody comes to our website and buys their tickets, so go, Bill O'Reilly," Baldanza said. "We want people who get our e-mails to send it to ten friends and say, 'Can you believe I got this e-mail?' and that works for us."

Spirit spends less than one half of one percent of its revenue on marketing. Five years ago, it was spending about 10 percent and faring far worse.

It's one of the cutbacks that allows Spirit to keep the cost of its tickets low, Baldanza argues, even if it brings controversy at the same time.

Baldanza wants to more than double Spirit's fleet in the next five years, from 30 now to at least 70 planes. The company will focus on adding more in-demand destinations in Latin America.

"We've helped liberate Haiti from a travel standpoint," Baldanza boasts, referring to the company's comparatively cheap fares there.

"We're looking to expand in markets where customers don't have a low fare option," he told ABC News. "Imagine if you lived in a city where the only restaurant was Capitol Grille. You might be happy that McDonald's moved in, not because you want to eat there all the time, but once in a while you might like the choice. That's it."

But don't expect first class service. If anything, the company is likely to keep adding more fees for services it thinks will lower the base fare. Baldanza didn't specify any additional fees the company plans to add in the near future, only saying, "If it's necessary we're not going to charge for it. If it's optional we're absolutely willing to take that infrastructure cost out of the base fare and add it to the cost of the service."

Baldanza makes no bones about the idea that Spirit is not for everyone. It's a model, some analysts say, that will likely work for the company and its customer base whose main goal is to buy a cheap ticket, but it's unlikely to be followed by others.

"Just from economic principles, there's an unlimited demand for anything, let alone travel," said airline industry analyst and consultant Robert Mann. "But the market tends to divide in the area of those who expect a certain level of service or service components as part of a price. And for a lot of people who prefer a more fully-featured offering, Spirit won't really probably be among their choices. For people who want pure price, yes they're absolutely in the market for that."

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