Courtesy: Detroit Free Press
Spirit Airlines To Add Frills
Entertainment systems to be upgraded
March 20, 2004
FREE PRESS BUSINESS WRITER
Spirit Airlines started almost 20 years ago as a no-frills, low-fare airline, but now it is taking a page out of JetBlue Airways' business plan and attempting to improve on it.
Within a year, Detroit Metro Airport's second-largest carrier plans to equip its jets with the latest in-flight entertainment system -- more modern than those on JetBlue's planes, the airline said Friday.
While no-frills Southwest Airlines is the grandfather of the successful low-fare airline, JetBlue has been creating a new model since it was launched four years ago.
Instead of eliminating frills, it took off with gleaming new planes that boasted leather seats, extra legroom and television screens at each seat showing 24 channels of satellite television from DirecTV.
By offering this and low fares, JetBlue planes are the fullest in the industry.
Spirit's decision to model itself more after JetBlue is a major step that will be noticed by fliers.
Spirit CEO Jacob Schorr said Spirit's entertainment system will be "more modern than JetBlue because it will be the latest and not like the one designed in 1999."
Earlier this week, Spirit lowered its cancellation charges from $75 per ticket to $25, matching those of JetBlue.
And in the next few months, Spirit passengers should be able to order meals by paying extra.
Schorr discussed Spirit's expansion plans the day after it announced its order with Airbus Industrie for 35 new jets worth $2 billion and an option to buy 60 more. The total value of the deal could reach $5 billion.
Spirit Airlines' move to offer state-of-the-art entertainment systems would benefit travelers, including those in Detroit and at the same time heat up competition with larger airlines such as Eagan, Minn.-based Northwest Airlines Inc., experts said.
"If you got a choice between flying an airline with an in-flight entertainment system and another without an in-flight entertainment, it's a no-brainer," said Terry Trippler, a Minneapolis airline consultant at Cheap Seats.com.
Spirit's new jets would gradually replace its old fleet of Boeing MD
-80s. Only the new Airbus jets would have in-flight entertainment systems.
Schorr said six of the 35 planes would be 124-passenger A319s and 29 would be 220-passenger A321s. The airline plans to use the A321s on high-traffic routes.
The first plane is scheduled to arrive in March 2005. The airline expects to have 12 by the end of 2005, a similar number by the end of 2006 and 11 by the end of 2007.
With more planes, Spirit plans to double its number of daily flights from 115 to as much as 230. In Detroit, Spirit plans to add about 15 new daily flights by the end of 2006 and about 25 by the end of 2008, Schorr said. Currently, Spirit has between 20 and 25 daily nonstop flights from Detroit.
Schorr said the airline could announce a nonstop flight from Detroit to Cancun, Mexico, as soon as it gets regulatory approval to fly the route. The flight would be Spirit's first direct international service from Detroit.
Most Michiganders are not familiar with JetBlue's version of low-cost travel because it doesn't fly here -- or many other places in the Midwest.
But launched just four years ago, JetBlue has rewritten much of the book on start-up discount airlines.
It serves 23 cities, primarily in the Northeast, Southeast and West. New York's Kennedy International Airport is its primary hub. Buffalo is the nearest city to Detroit that it serves.
Not only is JetBlue popular with passengers, it has the highest profit margin in the industry -- 16.9 percent in 2003, although the carrier said that promotions and stiff competition will drop the operating margin in the first three months of this year to as low as 9 percent.
But the carrier's underlying model is "rock solid," said Jon Ash of Global Aviation Associates in Washington, D.C.
JetBlue's costs are the lowest of any big airline when measured by what a carrier pays to fly one seat one air mile, or a seat mile.
"They ought to be able to produce margins in the high teens, and that's just not too shabby," Ash said, noting that any carrier would drool for such figures. "I don't see any reason why that wouldn't be sustainable for them."