Sun Sentinel Palm Beach Edition
Wings of desire
Spirit pilots want big raises; passengers want low fares.
From early beginnings as a trucking company in 1964, Spirit Airlines has grown into one of the fastest-growing and successful U.S. airlines of modern times.
But the Miramar-based airline’s expansion since adopting an ultralow cost business model in 2007 hasn’t come without pain.
While the carrier offers pricesensitive consumers the lowest base fare possible, Spirit charges extra for optional services, such as large carry-on bags, checked bags, onboard snacks and drinks (even water), and advance seat assignments. Since adopting that no-frills approach, the airline often raised the ire of consumers who assert they were caught off guard by the a la carte pricing system. As a result, Spirit racked up more complaints than most other U.S. carriers, a track record that management proactively sought to fix.
Nonetheless, the company generated a profit of $265 million on revenues of $2.32 billion last year from the operation of more than 400 daily flights across the U.S., Latin America and the Caribbean. And efforts to upgrade its service appeared to be validated recently when Spirit was named the most improved airline in 2016 in an annual Airline Quality Ratings study conducted by researchers from Embry-Riddle Aeronautical University and Wichita State University. The study ranks the 12 largest U.S. carriers based upon on-time performance, involuntary denied boardings, mishandled bags and customer complaints.
But those gains became a distant memory this week when a festering contract dispute with Spirit’s unionized pilots culminated in what the airline called a seven-day slowdown that disrupted the travel plans of 20,000 customers.
Management successfully petitioned a federal court to order a halt to the alleged slowdown, but not before widespread flight cancellations and even a brawl involving passengers and police at Fort Lauderdale-Hollywood International Airport added to an embarrassing story line of eroding customer service around the industry.
Now, Spirit’s ultra-low cost business model is at the epicenter of a public dispute with its roughly 1,600 pilots, who assert the airline is well-positioned to give them salaries paid by bigger airlines such as American, Delta and United. Spirit counters it can’t remain a discount airline if it gives big raises.
“Our low-cost structure is the backbone of our competitive advantage, and we remain dedicated to maintaining our cost discipline,” said Ted Christie, Spirit’s executive vice president and chief financial officer, while discussing the company’s 2016 financial performance earlier this year.
“There’s no question that it’s the Spirit pilots’ turn for a raise after most other airlines have given their pilots [increases],” said Seth Kaplan, managing partner at the trade publication Airline Weekly. “The last time the Spirit pilots got a new contract was back in 2010 that, by the way, was after a strike.”
Still, Kaplan asserts the Spirit pilots may have overplayed their hand with their profitability argument.
“Spirit – although it remains a successful airline – has seen its profits decline more than most other U.S. airlines during the past year,” he said.
“So Spirit’s profits have very much come down to earth, and that’s despite the fact that many of those other airlines have already given their pilots big raises,” Kaplan added. “Now Spirit can credibly argue that if it gives its pilots huge raises, it could be in danger of its profits being toward the bottom of the industry.”
When it sued to halt the slowdown, Spirit said the pilots are seeking more than $1.9 billion in wages, retirement benefits, profitsharing and retroactive pay over a five-year period. Management countered with a package worth more than $440 million.
But Spirit’s offer, which it said would give the pilots a 30 percent pay hike at signing, was ill-received by the pilots.
In a statement Wednesday, the Air Line Pilots Association International, which represents Spirit’s cockpit crews, said that on average, captains and first officers with 12 years of service at Spirit make 47 percent less in total compensation than their peers at Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest and United.
When considering pay rates only, Spirit pilots would need to double their salaries to be on par with their peers elsewhere, the union said.