Spirit Airlines, known for its low fares and a la carte flight upgrades, is introducing another perk the company hopes will attract travelers: lower fees.
In May, the Miramar, Florida-based airline stopped charging fees for canceling and changing flights, a move that Spirit executives expect will pay off despite the loss of fee revenue. The airline also increased checked baggage allowance to 50 pounds, the industry standard, from 40 pounds.
While the airline's domestic operations are growing, the company saw a decline in international flights in the first quarter, federal transportation data shows.
“What we've seen over time is that fewer people are actually flying Spirit,” Matt Klein, the airline's chief commercial officer, told CBS News senior transportation correspondent Kris Van Cleave. “So we believe the changes we're making are designed to attract new customers.”
Klein added that eliminating the fee was also intended to lower fares for loyal Spirit passengers. “It's something our customers wanted.”
Spirit isn’t alone in dropping fees. Delta and American Airlines, which had already dropped change fees early in the pandemic, have since dropped cancellation fees by the end of 2023. Low-cost carrier Frontier Airlines, a direct competitor of Spirit, also dropped cancellation fees in May.
In addition to eliminating fees that many travelers find burdensome, airlines are also facing government scrutiny. Biden administration officials have targeted a series of so-called junk fees and in May announced a definitive consumer protection regulation which require airlines and travel agents to disclose service fees up front, among other things. As a result, airlines must now disclose fees on the first web page where they list the price of a flight.
Travel experts and consumer groups have also long criticized airlines for use of “drip pricing” to conceal the real price of an airline ticket.
Sure, eliminating flight cancellation and change fees will cost Spirit big bucks — in 2023, the airline generated $150 million in those fees alone. But one industry analyst said low-fare carriers like Spirit must do what it takes to keep customers. JetBlue backed out of a bid to buy Spirit in March after a federal judge blocked The $3.8 billion deal was prompted by concerns that the merger would harm competition in the airline industry.
The deal's collapse left Spirit reeling, and the airline's financial performance continued to decline amid increasing competition from larger carriers. For the first quarter, Spirit reported a net loss of $142.6 million, up from a loss of $103.9 million in the same period last year, while operating revenue fell about 6% to $1.3 billion. Shares, which had hovered above $16 at the start of the year, have fallen to $3.64.
“Right now, Spirit and Frontier are fighting, fighting to stay in business,” Henry Harteveldt, an airline industry analyst with Atmosphere Research, told CBS News. “They're responding to the changes that the larger airlines have made.”
