Hey, just wanted to start a small discussion on the longevity of NK. Will their business model be able to hold up for a long time in the US, or will everyone be fed up with $50 carry-on fees in 20 years?

they work from a position of financial strength, and can adapt as required. The world wants cheap, they'll always have as place.

Carry-on bag is $35 if you reserve it when you book your ticket, first checked bag is $30. I think NK will survive and thrive, a lot of their pax either can't afford to fly on other airlines or are very tight!

Quoting sccutler (Reply 1): they work from a position of financial strength, and can adapt as required. The world wants cheap, they'll always have as place.

  

I can't think why Spirit be any different from, say, Ryanair.

mariner

I think they will survive for a long time. I believe there is a market for a ULCC in the US.

I also think they will adjust their strategy if they see significant drop in non- ticket revenue.

Like people are saying, they will adapt as necessary - as all businesses do.

No company, let alone an airline, can survive unless they satisfy customer demands. As long as you give your customers what they want, at a price they are willing to pay, then you will be successful.

The fact that Spirit has survived so long, and with profits, indicates they are doing what the customer wants. As long as that continues, there is no reason to think they will not be around in 20 years.

Quoting mariner (Reply 3): I can't think why Spirit be any different from, say, Ryanair.

According to a few NK employees I know, they actually get treated very well by their employer. NK seems to understand that employees are a resource, not a negative number on a balance sheet.

Certainly not an airline I intend to use, but then I'm solidly upper-middle-class and I would rather pay for a full-service carrier and fly comfortably than at the lowest possible cost.

Quoting DocLightning (Reply 7): Certainly not an airline I intend to use, but then I'm solidly upper-middle-class and I would rather pay for a full-service carrier and fly comfortably than at the lowest possible cost.

I first flew Ryanair in 1992 - Dublin to London - simply because they were considerably cheaper than either British or Aer Lingus and, even though I could easily afford the legacies, I thought their prices were a comparative rip-off.

Ryanair was easy and efficient and including all the costs, was less than than half the price of the legacies. It took me a wee while to sort out how to avoid some of the more arcane additional charges, but I'm a quick study and I have always considered - and often flown - Ryanair since.

I feel the same way about the US ULCC's.

mariner

Considering the overall pie of travelers grows each year, and fact that ULCC model pulls people out of their cars, or from sitting at home, they have a bright future in my opinion.

Matter of fact one of the Wall Street firms a year or two ago in an analysis called them the single US carrier with most upside potential as the legacy guys are too busy fighting for a the static top 10% of the market, while Spirit happily can market to the growing other 90%.

They'll be fine. Everyone has a price so if you're okay with almost no legroom, $30 baggage fees per leg, $35 for a carry-on per leg and minimal leg room, then you're the cheap fares like the $9 fare club that they have.

I used to fly them when they had MD-80's out of FLL. They were the cheapest gig in town and at the time my biggest concern was price. As I'm now older, comfort (I'm 6-4), ff benefits, and flight selection trump price. Spirit has found a way to cater to a specific niche traveler. At the end of the day, it's a business, not a charity.

Quoting mariner (Reply 3): I can't think why Spirit be any different from, say, Ryana

But FR looks like a full service carrier compared to NK. And even FR understood that their original business model only allowed for so much growth. That's why they have become more customer friendly and have relaxed some of their policies, like carry-on allowance for example. Now personally I never had any issues with FR, even before their "change of heart". For my quick weekend trips, they have been great. As long as you know what to expect, there should be absolutely no issues. The only thing that I would change about FR is the need to get your boarding pass stamped before security if you have a non-EU passport. That's such a time waster and no other airline does that (maybe W6 does too, don't remember) . With that said, I would have to think long and hard before flying NK. They do take cheapness to an extreme.

Quoting TIA (Reply 11): . With that said, I would have to think long and hard before flying NK. They do take cheapness to an extreme.

Each to their own.

I can't see much difference between the charges of Spirit and and those of Ryanair and a lot of people don't share your feelings:

http://www.bloomberg.com/bw/articles...irline-is-also-the-most-profitable

"The Most Hated U.S. Airline Is Also the Most Profitable

In spite of the rancor it inspires, Spirit has become the most profitable U.S. airline in terms of its operating margin and return on invested capital. Spirit’s 16.2 percent margin is highest among U.S. public airlines, as is its 26 percent return on capital, according to data compiled by Bloomberg.

mariner

Quoting mariner (Reply 12): a lot of people don't share your feelings:

Oh I'm quite aware of their current financial state. But IMHO Spirit will change their business model once growth in their current segment starts tapering off. After all FR was quite profitable even before they started to put on a more customer friendly face.

Some people will want the bottom line and they'll want it cheap.

That said, they will get what they pay for, but I imagine, eventually, a few will get fed up over NK.

They will adapt, but it seems most airlines and most other industries are heading towards an a la carte product where everything is unbundled and you pay only for what you want so I see it lasting for quite a long time.

Quoting TIA (Reply 13): After all FR was quite profitable even before they started to put on a more customer friendly face.

But Ryanair's "friendly face" is more a matter of form than of content. Yes, they dropped a few - high penalties for failing to check in in advance or for losing a boarding card for example - but it's still a long list of the charges they do still make, as in this link:

http://www.ryanair.com/en/fees/

"TABLE- OPTIONAL FEES"

They smile a lot more these days.  

mariner

I'm curious as to why the question? Any business model might require adapting with change. A profitable, nimble, and numbers run company will adapt faster than other business models. The ULCCs are *very* numbers driven. They know what they can charge for any given service. The issue is they are not building brand loyalty by pursuing the most frugal customers.

But that could change as Ford and Chevy have done. Or WN if an airline example is more appropriate.

Quoting sccutler (Reply 1): they work from a position of financial strength, and can adapt as required. The world wants cheap, they'll always have as place.

As long as they have a profit, they will grow and adapt. That pretty much ensures the 20+ year survival.

Lightsaber

Quoting TIA (Reply 13): Oh I'm quite aware of their current financial state. But IMHO Spirit will change their business model once growth in their current segment starts tapering off. After all FR was quite profitable even before they started to put on a more customer friendly face.

I think we have a long way before Spirit (~70 aircraft) resembles FR (312). The latter needing to adapt in order to continue to grow they are beginning to saturate their market and need to differentiate from EZ. Spirit is not hindered by either of these circumstances.

Quoting lightsaber (Reply 17): But that could change as Ford and Chevy have done. Or WN if an airline example is more appropriate.

I agree. I once knew a company CEO that would travel private most days but for many routes he couldn't help but take WN from BUR for those short jumps where flying private didn't help. I can't see him flying Spirit anytime soon though  

tortugamon

Quoting DocLightning (Reply 7): According to a few NK employees I know, they actually get treated very well by their employer. NK seems to understand that employees are a resource, not a negative number on a balance sheet.

Hardly, quite the opposite in fact. I used to work for Spirit and they were anything but nice to the employees.

Quoting DocLightning (Reply 7): According to a few NK employees I know, they actually get treated very well by their employer. NK seems to understand that employees are a resource, not a negative number on a balance sheet.

I can agree that Spirit was a fun place to work, but FLL is the only station that still has mainline customer service staff—the rest have been outsourced. Employees seem to be a resource they would like to see depleted.

I think people will also begin to adapt to the ULCC model in the United Stated more and more. For younger generations it will become the norm to pay for bags, carry-ons, and snacks on plane. As older generations, who reminiscent about the "old days" of free bags, meals, and the overall cultural of past air travel begin to have less influence, today's airline culture will become the norm. In the next 10-15 years anyone under 30 probably won't remember full service being offered on domestic flights.

Quoting mariner (Reply 3): I can't think why Spirit be any different from, say, Ryanair.

Because Ryanair isn't as low as NK so as to make you pay to load your own bags on the airplane.

Quoting OB1504 (Reply 20): I can agree that Spirit was a fun place to work, but FLL is the only station that still has mainline customer service staff—the rest have been outsourced. Employees seem to be a resource they would like to see depleted.

DTW still has in-house staff above and below wing.

Also, I've heard repeatedly that pilots and flight attendants are generally quite happy at Spirit. I even know of a few regional pilots eager to move to NK.

Quoting AWACSooner (Reply 22): Because Ryanair isn't as low as NK so as to make you pay to load your own bags on the airplane.

One wonders why Spirit has rampers then, and why they unionised.

mariner

Their profit margins speak for themselves. I'm sure they'll do a few things differently as they continue to grow and adapt, but there's a niche for their service in many many many more markets than what they currently fly.

Quoting mariner (Reply 24): Quoting AWACSooner (Reply 22): Because Ryanair isn't as low as NK so as to make you pay to load your own bags on the airplane. One wonders why Spirit has rampers then, and why they unionised.

I believe what AWAC is referring to is Spirit's fees for carry-on baggage. What AWAC fails to acknowlege is that there are actual nominal costs associated with carry-on baggage. It takes more time to board an aircraft if every passenger is carrying large amounts of carry on baggage and having to take time stow it overhead, not to mention the fact that usually the last 10 or so passengers have to gate check their baggage which slows the boarding/loading process down even more, and requires ramp personel (who are also a cost to the airline) to load and unload the excess baggage. The longer the aircraft is out of the air, the longer it's not making money. And then there is the issue of the added weight. Carry ons add weight to the aircraft and the heavier a plane is, the more fuel it burns, and fuel costs money, it's simple physics meets economics.

Airlines are in the business of making money for their shareholders, like it or not. They are not a charity that will just eat these extra costs, so therefore, the costs will be passed on to customers in one of two ways. 1) airlines will either divide the extra costs among all passengers In the base ticket price like most currently do (status quo), or 2) do like NK or F9 or G4, and assess the added costs to customers that are directly responsible for these extra costs by bringing large amounts of carry on baggage. Personally, I think the latter is the fairest way to offset these costs (why essentially penalize a person who doesn't bring a carry on by distributing the costs of other passengers excess baggage in their base ticket price?).

Back to the OP, I think Spirits longevity will be based on their managements ability to continually stay ahead of the curve, keep fresh ideas coming, and to keep costs low. I do feel that (unfortunately for AWAC), in 10 years, most domestic airlines are going look like what Spirit looks like today( or that the Spirits, and Frontiers, and Allegiants will represent a majority of the airline market). With a shrinking middle class and Americans having less disposable income, the 'Spirit' model is in a continual, steady transition from niche to norm.

As IATA says its the bottom end of the travel market is growing much faster than the top end which has actually shrunk since 2008.

Spirit in essence has a continually growing market of new passengers being introduced as they become tempted to fly when they might have not done so otherwise.

I expect the ULCC model in the US just like Asia and Europe have bright future.

Quoting DocLightning (Reply 7): According to a few NK employees I know, they actually get treated very well by their employer. NK seems to understand that employees are a resource, not a negative number on a balance sheet.

I know in ACY, the customer service staff was outsourced, and the ramp gets outsourced eff. June 1st... so there are no such sentiments there.

Quoting Beechtobus (Reply 26): I believe what AWAC is referring to is Spirit's fees for carry-on baggage.

Ah, now it makes a bit more sense, thanks.

I'm not sure why the carry-on bag fee causes such a fuss. It's solved the problem of crowding of the overhead lockers, which, for at least one of the ULCC's, was the biggest single source of complaints.

Those complaints have mostly gone away, but not at Ryanair which tackled it differently:

http://www.telegraph.co.uk/travel/tr...gage-policy-angers-passengers.html

"Ryanair's baggage policy angers passengers

New rules mean Ryanair only guarantees half of passengers can take on board their carry-on luggage

Ryanair’s new cabin baggage policy – introduced in an effort to silence its critics - is causing problems, with a lack of space in overhead lockers forcing up to half of passengers to stow their luggage in the hold.

The problem has also nullified another of Ryanair’s new policies – fully allocated seating. It was introduced to eradicate the pre-flight scrum, where passengers begin queuing long before there gate opens to ensure they sit next to their travelling companions, but now fliers are forced to queue to ensure they are one of the first 90 people on board."

The US ULCC's - Allegiant, Frontier and Spirit - don't have that problem.

mariner

How long will Sprit last, wow...

If any airline is a blue chip investment, to be collected in 2035, I'd bet on Spirit. Above all others, globally.

Quoting Beechtobus (Reply 26): I believe what AWAC is referring to is Spirit's fees for carry-on baggage. What AWAC fails to acknowlege is that there are actual nominal costs associated with carry-on baggage. It takes more time to board an aircraft if every passenger is carrying large amounts of carry on baggage and having to take time stow it overhead, not to mention the fact that usually the last 10 or so passengers have to gate check their baggage which slows the boarding/loading process down even more, and requires ramp personel (who are also a cost to the airline) to load and unload the excess baggage. The longer the aircraft is out of the air, the longer it's not making money. And then there is the issue of the added weight. Carry ons add weight to the aircraft and the heavier a plane is, the more fuel it burns, and fuel costs money, it's simple physics meets economics.

So...using this logic...why aren't airlines charging extra for hauling around a 300 lb person vs a 100 pound person? Why should I, as a 140 lb man have to pay the same rate as Fatty BigMac?

I've said it before, if the airlines would actively enforce the carry-on rules they came up with years ago, then we wouldn't be in this mess. And to charge MORE to have pax put their own bags on the plane (carry-on) vs. paying others to put the bags on the plane (checked) is about the most self-defeating idea out there. But since they now view passengers as piggy banks to simply make the shareholders happy instead of finding some compromise...

Quoting AWACSooner (Reply 31): So...using this logic...why aren't airlines charging extra for hauling around a 300 lb person vs a 100 pound person? Why should I, as a 140 lb man have to pay the same rate as Fatty BigMac?

Some airlines do, such as Southwest, with their Customer of Size policy;

http://www.southwest.com/html/custom...tra-seat/?clk=GFOOTER-CUSTOMER-COS

"Customers of Size Policy"

Samoa Air actually charges passengers by weight:

http://www.theguardian.com/world/201...pr/02/samoa-air-pay-what-you-weigh

"Samoa Air says charging passengers by weight is 'concept of the future'

But then Samoans can often be quite large.

mariner

Quoting AWACSooner (Reply 31): So...using this logic...why aren't airlines charging extra for hauling around a 300 lb person vs a 100 pound person? Why should I, as a 140 lb man have to pay the same rate as Fatty BigMac?

Since a 6'7" Samoan male has cannot choose to weigh 100 lbs, and I'm sure there is likely a small portion of obese people that have genuine medical conditions (thyroid problems, metabolic damage, etc.), I'm sure the airlines know that they would ensue a barrage of discrimination lawsuits if they attempted to charge passengers by the pound or kilo. These, and all other passengers can however choose what and how much they carry-on or check-in, and in NKs, F9s, and G4s case, they are being charged for this choice.

Using your rational, let me ask you a question: should FedEx charge the same to ship a 1x1x3 box full of gold bricks as they do to ship a 1x1x3 box with a pillow in it? Of course not, weight costs the airlines money, it's not a matter of whether the passengers or the ramp crew loads the bags, it's the fact that more baggage, whether it's carry on or checked means more weight which means more fuel, which means more costs.

Quoting AWACSooner (Reply 31): But since they now view passengers as piggy banks to simply make the shareholders happy instead of finding some compromise...

I'm really not sure what to tell you there, but that's the big corporate American capitalist system in action, be it Southwest or Spirit or Walmart or Red Lobster. These companies may run their businesses completely differently, but the idea is to make the shareholders happy, like it or not. Either the market responds and uses their product to the extent that they are able to make profits or the market doesn't respond and the company is forced to change or shut down.

Quoting Beechtobus (Reply 33): I'm sure the airlines know that they would ensue a barrage of discrimination lawsuits if they attempted to charge passengers by the pound or kilo.

From the linked article in post #32:

"A Samoan airline that has become the world's first carrier to charge passengers according to their weight has defended its policy. People wishing to travel with Samoa Air have to submit their weight, including their luggage, when booking to calculate their fare.

Proclaiming the "pay only for what you weigh" scheme, the company's website says: "Booking a flight with us is as easy as inputting your approximate weight into our online booking engine (don't worry, we will weigh you again at the airport) – you then can prepay your 'guesstimate', guaranteeing you that much weight is allocated to you for that flight … with Samoa Air, you are the master of how much (or little!) your air ticket will cost."

They have also introduced an "XL Class" for passengers over 286 pounds (130 kilos):

http://www.telegraph.co.uk/travel/tr...L-class-for-larger-passengers.html

"Samoa Air, the world's first airline to charge people according to their weight rather than by seat, is introducing a special "XL class" to cater for larger passengers."

But to reiterate the basic point:

"Passengers on Samoa Air do not pay for a seat but pay a fixed price per kilogram, which varies according to the length of the route. "

mariner

Quoting Beechtobus (Reply 33): I'm sure the airlines know that they would ensue a barrage of discrimination lawsuits if they attempted to charge passengers by the pound or kilo.

Why? Since we're nothing more than human freight to these airlines nowadays, any good lawyer will argue that charging by weight is perfectly legal...doesn't matter whether it's a medical condition or not. Can't have it both ways if you see no problems charging for carry-ons and whatnot. Samoan Air actually has this one right, imo.

Quoting DocLightning (Reply 7): NK seems to understand that employees are a resource, not a negative number on a balance sheet.

Which airlines in the US view employees as a negative number or is that just a rant?

Quoting AirStein3 (Thread starter): Hey, just wanted to start a small discussion on the longevity of NK. Will their business model be able to hold up for a long time in the US, or will everyone be fed up with $50 carry-on fees in 20 years?

Quoting L0VE2FLY (Reply 2): Carry-on bag is $35 if you reserve it when you book your ticket, first checked bag is $30. I think NK will survive and thrive, a lot of their pax either can't afford to fly on other airlines or are very tight!

If the legacy airlines adopted a carry on bag fee it would make life much harder for NK, but I don't see them doing that. The carry on bag fee allows NK to set their own pricing and not be price matched. That's the key.

Quoting cfichad (Reply 19): Hardly, quite the opposite in fact. I used to work for Spirit and they were anything but nice to the employees

Pls list some examples of Spirit not being nice to employees

Quoting bobnwa (Reply 38): Pls list some examples of Spirit not being nice to employees

Well, a certain pilot strike in 2010 comes to mind:
http://edition.cnn.com/2010/TRAVEL/06/12/airline.strike/

Or the mx worker up in ACY who was a whistle-blower:
http://skift.com/2013/02/17/spirit-a...-on-falsified-maintenance-records/

Quoting AWACSooner (Reply 39): Well, a certain pilot strike in 2010 comes to mind:

To get a contract with quite possibly the best work rules of any US airline out there...

5 years later, things are much different. Thousands of applicants and sold out job fairs just to talk to someone there.

Quoting AWACSooner (Reply 31): And to charge MORE to have pax put their own bags on the plane (carry-on) vs. paying others to put the bags on the plane (checked) is about the most self-defeating idea out there.

Spirit charges more for carry-ons because it serves as a disincentive to passengers who are bringing carry-ons. Folks will usually pay to check the bag because it's $5 cheaper. Now the passenger is unencumbered and will board much faster than a passenger with a carry on. Since carry-on passengers slow the boarding process down, they are boarded first. Once they're on, the rest of the boarding is very quick.

I personally think it's better than the way AA handles it - folks with only personal items board first (after first class, executive platinum, platinum, and priority access - or about 3/4 of the plane) before folks with carry-ons - guess where those pax put their personal items? - in the overhead bin instead of under the seat in front of them. Then when the pax with carry-ons board, there's no place to put them, and now there's a rush to get those bags checked to final destination.

The number of folks who actually carry on a bag is very low for a domestic flight, a full plane of 178 folks can be boarded in less than 20 minutes. At the same time on that same plane with 178 pax the number of bags loaded into the cargo hold as checked bags is usually less than 40 bags.

So that is the purpose of Spirit's baggage fees and to make a little money on the side.

Quoting Woodreau (Reply 41): I personally think it's better than the way AA handles it - folks with only personal items board first (after first class, executive platinum, platinum, and priority access - or about 3/4 of the plane) before folks with carry-ons - guess where those pax put their personal items? - in the overhead bin instead of under the seat in front of them. Then when the pax with carry-ons board, there's no place to put them, and now there's a rush to get those bags checked to final destination.

Why shouldn't people with personal items be allowed to use the overhead? They'd paid to check their bags. Why should they suffer with less leg space, having to cram their items under the seat so some guy who *doesn't want to pay* can fit in his oversized suitcase?

Quoting bobnwa (Reply 36):

It's not a rant, troll. Many companies in the U.S. view employees as a liability rather than an asset. But I'm pretty sure you already knew that.

This week's Aviation Week (May 25 - June 2) listed Spirit Airlines as the #1 Top Performing Airline (TPA) (Small Airlines) and #2 Overall after Japan Airlines. They definitely must be doing something right. I think I will buy some shares.

Quoting Woodreau (Reply 41): I personally think it's better than the way AA handles it - folks with only personal items board first (after first class, executive platinum, platinum, and priority access - or about 3/4 of the plane) before folks with carry-ons - guess where those pax put their personal items? - in the overhead bin instead of under the seat in front of them. Then when the pax with carry-ons board, there's no place to put them, and now there's a rush to get those bags checked to final destination.

AA discontinued this practice in part for the reason you cite.

Quoting Escapehere (Reply 42): Why shouldn't people with personal items be allowed to use the overhead? They'd paid to check their bags. Why should they suffer with less leg space, having to cram their items under the seat so some guy who *doesn't want to pay* can fit in his oversized suitcase?

Then they should've checked the personal item, too. The airline can and will ask passengers to remove personal items from the overheard to accommodate carry-on bags which cannot go under the seat.

Quoting ChiSky16 (Reply 21): I think people will also begin to adapt to the ULCC model in the United Stated more and more. For younger generations it will become the norm to pay for bags, carry-ons, and snacks on plane. As older generations, who reminiscent about the "old days" of free bags, meals, and the overall cultural of past air travel begin to have less influence, today's airline culture will become the norm. In the next 10-15 years anyone under 30 probably won't remember full service being offered on domestic flights.

I think this is one of the best arguments in this thread. I think younger generations will see this ancillary system as normal, they won't know anything about the "golden days of air travel", and they'll see NK as just like all the other airlines but just with a few more fees that they'll adapt to in order to get the best value for their money.

There are countless examples of people who felt that FR was a joke and would never amount to anything because people would never subject themselves to that kind of treatment in exchange for just a cheap fare. But decades later FR is still going strong. Sure, they're adjusting their model now, but they've used the ULCC model to basically fuel their growth to this point. And now they're big enough to afford to change their model to some extent because they have a lot of market share and reach. I would be willing to bet NK will follow a similar path. So their long term longevity is pretty safe in my opinion.

The bottom line to me is that the size of the American domestic market and the European market are fairly similar, NK has a lot less airlines to compete against than FR has had which makes it easier for them to stand out in the US domestic market, and no matter how much we on A.net like to think product matters to most people, it really is price that rules the day. NK is proving it with their mind blowing margins. They're going to be here for a quite a while and I wouldn't be surprised if they're the 5th largest airline in the US at some point in the next 10-20 years. When price is the highest consideration for most airline passengers, an ULCC model will prevail. FR has already proven it.