Spirit CEO wants to buff 'rough edges,' says fares will stay low

USA Today  2016-02-24 19:43:12

AutoplayShow ThumbnailsShow CaptionsLast SlideNext SlideWASHINGTON ? Spirit Airlines is a profitable carrier known for its cheap fares, but new CEO Bob Fornaro would like to shed its reputation for flight delays, cancellations and passenger complaints."We have a lot of rough edges, and we can run a smoother, more reliable airline," Fornaro, who took over Jan. 4, said Wednesday at an International Aviation Club luncheon. "That's my commitment to my great team at Spirit and to our customers."He committed to "small, meaningful changes" to reduce delays, cancellations and lost bags. The steps include putting more slack in the system with replacement aircraft, fewer flights at busy periods, more use of technology and more active customer service, he said."I believe reputation matters," said Fornaro, who led AirTran before its sale to Southwest in May 2011. "Again, we're not going to change the underlying business model."Spirit has grown to nearly 400 daily flights to 55 destinations in the U.S., Latin America and the Caribbean. More nonstop routes await in the wings:-- March 24 between Los Angeles and Seattle-Tacoma.-- March 25 between Los Angeles and Portland.-- April 8 between Los Angeles and Phoenix.-- April 14 between Atlanta and Minneapolis-St. Paul or New Orleans; Las Vegas and Seattle-Tacoma; Los Angeles and New Orleans or Philadelphia; Minneapolis-St. Paul and Philadelphia.-- April 21 between Baltimore-Washington and Detroit or Boston.-- April 28 between Boston and Minneapolis-St. Paul.-- April 29 between Philadelphia and Detroit or Fort Lauderdale.Spirit serves 20 cities outside the U.S. and will compete to fly to Cuba, Fornaro said. The Transportation Department is accepting applications through March 2 to resume scheduled flights to the isolated island.Spirit, based in Miramar, Fla., is highly profitable, beating analyst expectations for the final quarter of 2015 with $74.4 million net earnings that contributed to a total $317.2 million in profit for the year from $2.14 billion in revenue.Spirit was a small carrier that attracted little attention -- and sometimes ridicule -- when it became an "ultra-low cost carrier" about a decade ago, Fornaro said. But since 2006, the airline has tripled its revenue, its number of aircraft (to about 80) and its employees, he said.USA TODAYAA to offer fares with 'less frills' to battle low-cost carriers like SpiritSpirit Airlines unveils its new black-and-yellow livery in Rome, N.Y., on Sept. 15, 2014. (Photo: Ben Mutzabaugh, USA TODAY)After the rapid expansion, American, Delta and United airlines have since begun to push back against Spirit and other so-called "ultra-low cost carriers" with plans for restrictive discount fares that come without ?perks? like seat assignment.American CEO Doug Parker assured skeptical analysts in October that the airline "will compete on non-stop service."But Fornaro questioned how long the legacy carriers could surgically discount their tickets under phrases like "limited basic economy" to compete against Spirit."We think this trend will continue for some time," Fornaro said. "But it's anybody's guess how long this price-matching will go on, but it's good for consumers and proves the powerful effect of the" ultra-low cost carriers.Elsewhere, Fornaro talked about the Transportation Department's study about changing rules for access to restricted airports in the New York City. Fornaro said allowing more low-cost carriers would benefit travelers. The federally regulated slots for permission to take off and land are worth millions of dollars each and carriers that hold them are reluctant to surrendering them."Efforts must be taken to ensure robust domestic competition," Fornaro said.Spirit's value is built on piecemeal pricing called "bare fares." The airline charges extra for seat assignments, snacks, boarding passes and overhead storage ? and the seats don?t recline. But it generates the most complaints about its flight problems."Compared to other low-cost carriers I know or have known, Spirit is the most laser-focused on offering the lowest possible price," Fornaro said. "We won't be able to satisfy people who just don't like our model."USA TODAYSpirit's new CEO: Fees stay, but service must improveAmong the 13 airlines that report their performance to the Transportation Department, Spirit had the worst on-time arrival rate of 69% during 2015, the first year it began reporting. That?s more than 10 points behind the industry average 80% of flights arriving within 15 minutes of their schedule.Spirit?s 182 canceled flights out of 10,671 in December ranked it fifth, according to the Bureau of Transportation Statistics. The airline also mishandled bags at a rate of 2.57 per 1,000 passengers, which ranked fourth during 2015, according to the department.Traveler complaints poured in at a rate of 11.73 per 100,000 passengers, according to the department. More than one-third were about flight problems, while boarding, baggage, fares, and customer service each drew passenger ire.The complaint rate was easily the worst among major carriers. Frontier Airlines was next with less than 8 complaints per 100,000 passengers and the industry?s average was less than 2 complaints per 100,000 passengers."As we continue to implement our growth plan at Spirit, we will continue to focus on the following: we will keep our costs lower, we will keep it simple, we will smooth out our rough edges, we will offer great value for price-sensitive leisure and business travelers, and we will be a good partner with the DOT and the FAA," Fornaro said.Read or Share this story: http://usat.ly/1XN7y5T

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