Loyalty Truth

Air travel has changed from an exciting and privileged experience to something considerably less elegant. Leisure travelers absorb the shock from ever-changing TSA procedures at security checkpoints, and unknowingly contribute to the woes of their fellow travelers when they board loaded down with enough bags to make the Beverly Hillbillies look like minimalists.

For the business traveler sitting across the aisle, aspirations of time efficiency and comfort are placed on a 3 hour hold each trip as seat pitch has become so tight that only a notebook computer will open up comfortably in flight.

Corporate travel is increasingly driven by economics, and many flyers who used to hold out for a legacy carrier to fly in familiar circumstances and collect more frequent flyer miles are now abdicating “loyalty to the livery” and accepting the best combination of schedule and price – period.

There is a lot of talk among airlines and consumers about how to improve the air travel experience, and last week Spirit Airlines took a bold step towards “improving” the situation by announcing it would impose baggage fees – not for checked bags – but for bags carried on with intent to be placed in the overhead bins as of August 1.

Ben Baldanza, Spirit’s President, has been making the media rounds defending his airline’s new policy. Advancing a questionable argument, he has been rationalizing the new policy saying that consumers will actual save money on a net basis because Spirit’s fares are being reduced, and that 5 minutes saved in more efficient boarding  of aircraft accumulated over a 24 hour period will save 20 hours of airplane time per day – the equivalent of having two extra $40Million planes in the fleet. If that isn’t fuzzy math, then I don’t understand the concept.

Spirit’s new baggage policy has its foundation in operational efficiency as do many similar airline policies. The trouble is, they seem to have forgotten about the customer in the process. Between the new baggage policy and the recent announcement of its “pre-reclined seats”, Spirit is either focusing ever more narrowly on its target market, or is outsmarting itself one new policy at a time.

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Spirit may be wiser than we think. They are a price-driven airline appearing to cater to the leisure traveler. It is possible that they have abandoned all thought of courting the business traveler, and are moving ahead with new policies to further strengthen its position in its chosen market.

Spirit’s promotional marketing strategy is oriented to the leisure flyer. In a recent survey of email communications used by loyalty program sponsors, Hanifin Loyalty found that Spirit was the single most prolific sender of email among 22 companies studied, with an average of 14.77 emails per month. With almost zero evidence of behavioral triggers in its email flow, Spirit uses edgy messaging to tout low prices in over 96% of its emails.

In my view, there can only be one low price leader per category. In retail it remains Walmart, and in air travel, it could be Spirit. There is risk to this strategy, and cracks have appeared in Walmart’s low-price strategy recently as consumers are questioning if in fact they offer the lowest prices around. There are several discussions on Retail Wire on the topic and here is a link to one of them. The warning is that once a company is positioned as the low price leader, they have little to cushion their fall should they lose the advantage as customer experience and quality are often perceived to be below the competition.

Time will tell if Spirit has made the right moves and, while the market decides, my vote is for the regulators to stay out of it.

I believe that many business travelers will resist these changes and avoid Spirit or any other airline who adopts similar policies for two big reasons – checking a bag limits the ability to make changes to an itinerary on the day of travel and costs business travelers precious time once landed at a destination.

Spirit has the right to choose its course, as do we in the frequent flyer population.

What do you think?