Posted on: 15 September 2015 by Mark Howells
“Yes, Amazon is a good comparison [for what we’re trying to do]; it has become a great value, easy-to-use, first point of call for consumers when they want just about anything – and we want to bring that to Spirit,” remarked Ben Baldanza, CEO of Spirit Airlines, by live video link from Fort Lauderdale to London, as he explained the carrier’s ultra low-cost model to World Low-Cost Airlines Congress (WLCAC) delegates.
“The other key thing Amazon has achieved is to deliver the interface, which works on anything,” Baldanza continued, noting also that Amazon is more than just a model the airline wants to emulate. “It’s a competitor too, as we compete for the consumer dollars, such as ‘Do I buy a a physical thing from Amazon or do I go and visit Grandma in South Florida’,” he explained.
With the new friendly Ryanair moving away its hard-core model, Baldanza was asked if the Irish carrier is going ‘soft’. “No, it’s about the customer knowing the value proposition,” he replied, adding that he recognised that Ryanair’s recent customer service changes had altered that proposition.
Baldanza acknowledged that Spirit has observed the changes at Ryanair and is considering its own model. “We’re addressing that earlier in our lifecycle though, while we still have around 70 aircraft rather than a few hundred. Think of it like an older person [Ryanair] having had a wild time and then suffering a heart attack and vowing to live a healthier lifestyle. We’re like the younger person who sees that and says that we’re going to do what’s necessary to avoid that heart attack.”
Quizzed about the complexity of the booking procedure facing customers, Baldanza turned to another comparison. “It’s like [Mexican restaurant chain] Chipotle. A thousand people can go in and get a thousand different types of burrito, with different mixes of ingredients. All those potentials should make it complicated, but it’s simple, it’s understood,” he explained.
Looking at future opportunities, Baldanza identified the application of revenue management strategies to ancillary revenue products as a way in which greater revenue could be achieves. “They are fairly statically priced right now. Getting smart in that role is worth a lot,” he emphasised. “That will help to take us from around $50 in ancillary revenues passenger to around $60. We’re evolving towards that.”
Further ahead, Baldanza concurred with Wizz Air CEO József Váradi over the value of the Airbus A321, for which Spirit has more than 40 firm orders, which Baldanza said would be roughly split between A321ceos and A321neos. The latter, he noted, “will clearly be lowest unit cost aircraft in our fleet”. When all current orders are delivered, the fleet split will be one third A321s to two-thirds A320.
“The other benefit of the A321 will be at airports where we have limited access. With its extra seats, the A321 will help us to grow in those places,” Baldanza added.
Bernie Baldwin, editor, Low-Fare & Regional Airlines/LARAnews.net