How Terrible Is Spirit Airlines, Really?

Sympathy for the devil. 
Reuters

I took Spirit Airlines, the country's undisputed king of fee-mongering, to Chicago for my college reunion a few weeks ago. If it wasn't the single worst flying experience of my life, it was certainly the most memorably bad. Among the indignities suffered, I will mention three:

1) Having to pay a $50 carry-on fee ($5 more, amazingly, than it would have cost me to check the weekend bag).

2) Sitting in seats that would not recline—and without a complimentary beverage.

3) Arriving at the Spirit kiosk to check in at ORD precisely 45 minutes before my late-Sunday flight would depart ... only to learn that Spirit had canceled my ticket mere seconds before I swiped my card, per their draconian reservation-cancellation policy. I spent the night in a hotel and woke up at 3:30am to make the only morning flight back to NYC.

In the last few weeks, I have discovered a quietly suffering sub-culture of semi-frequent flyers who have flown Spirit Airlines once, and never quite recovered from the experience. When I mentioned my Chicago fiasco to friends, the response was not, "Sucks, dude," or "You shoulda read the fine print." It was, rather universally: "I KNOW, SPIRIT IS THE WORST."

This might sound like selection bias, but the universe of people outside of my small group seems to agree only more strongly. "FAA Report: Spirit Airlines Is The Fucking Worst," The Onion observed indelibly. Spirit was the only American-based carrier in Business Insider's analysis of the world's worst airlines. Type "Spirit Airlines is" into a Google search bar, and the autocomplete provided by the Internet's hive-mind reveals mostly a list of synonyms for very bad

And yet.

What if I told you there's an airline that, between 2008 and 2012, saw fuel costs rise by nearly 60 percent, increased salaries by about half, flew more miles at higher costs, and, despite all that, still managed to reduce its average ticket price by 20 percent?

That would sound like a pretty good airline, huh? Well...

... yes, I'm talking about Spirit Airlines. Between 2008 and 2012, Spirit's average ticket-revenue-per-passenger tell from $94 to $75, according to documents filed with the SEC.

Ah, but wait. That's ticket revenue before fees. What happens when you add extra charges (aka: "non-ticket revenue") into the mix? The typical Spirit flyer paid $51.39 in fees last year, more than 40 percent of the total cost of your average flight. Fees have tripled since 2008, but the average revenue-per-flyer is up just $14 in five years, as the graph below shows. That's nothing, really. Fast-food hamburgers have a frothier rate of inflation.

Spirit's play here is the domestic airline industry's strategy on steroids. Many airlines simply can't make money on the ticket prices you see online. So they make money on the prices you can't see online, as I explained in a video for The Atlantic this week (see below). Baggage and cancellation fees have increased by 650 percent overall since 2007 among domestic carriers. Nobody is playing this game more aggressively than Spirit.

The subtext of most Spirit hate is that the fees are unfair and we're being fleeced. Indeed, Spirit earns "40% more per airplane than any other U.S. airline," according to the Wall Street Journal. This is a direct result of the high-fee, no-mercy strategy employed with such ruthless efficiency in Chicago. Maxim Group airline analyst Ray Neidl concludes Spirit exists for one reason only: "To make money." Spirit is a business, yes, but few businesses are so nakedly businessy than Spirit.

But, in its defense, flying is still a relative luxury for many families and round-trip flights on Spirit are still cheaper than practically every other airline, even after you account for fees. Plus, it's not clear that the company is using hidden charges to raise prices faster than its competitors. Between 2010 and 2012, according to its SEC filings, Delta increased revenue per passenger-mile by about 12 percent. In that same time Spirit has increased its revenue-per-ticketed-passenger by exactly 12 percent and from a lower base.

In the last three years, Spirit's fees have increased at almost exactly the same rate as fuel costs, as you can see in the graph below. Here, I've taken Spirit's revenue (ticket and non-ticket) and graphed it next to its top two expense items, which are people and fuel. I don't know if Spirit sees fees explicitly as a fuel hedge, but that's certainly what they look like here.

I may never fly Spirit Airlines ever again. If I do, I'm wearing all four shirts and three pants at once and shoving my socks and underwear in my computer bag to save $50. But there is something impressive, if not quite admirable, about a business that is equal parts populist and profitable. Spirit makes hurtling through the atmosphere in a pressurized metal tube exactly as luxurious as it sounds. Nobody ever said that flying had to be pleasant. On Spirit Airlines, you get what you pay for—and not one peanut more.

Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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