My Experience Flying Spirit Airlines This Week by Whitney Tilson, Seeking Alpha

Summary

Having recently bought the stock, I wanted to experience Spirit for myself.

Though Spirit has a much higher complaint rate than other airlines, I had a great experience and didn’t observe any customer service problems on either flight.

The customers Spirit serves, how it’s handling areas of customer dissatisfaction and how it generates extra revenues and keeps costs low makes me more bullish on the future of the company.

The stock which, even though it’s up 20% since my first article three weeks ago, remains exceptionally cheap at ~10x earnings.

My biggest concern in owning the stock of Spirit Airlines (SAVE), which I added to my portfolio last month, is the very high complaint rate among its customers, as I discussed in my recent article, Spirit Airlines Is Poised To Be The Next Ryanair. Thus, to see what it’s really like to fly Spirit, I booked a flight from New York City (LGA) to Dallas (DFW) on Tuesday afternoon and returned the next morning. Below are my impressions and pictures.

Overall, it was a great experience. Both flights boarded smoothly, departed on time and arrived early. The flight attendants were nice and the one making the safety announcements was genuinely funny – sort of the like old days of Southwest (LUV) from what I’ve heard.

The boarding area at LGA was pretty dingy – it reminded me of the Greyhound station at the Port Authority – as you can see in this picture (forgive the low quality of my cell phone pictures):

Whitney Tilson Spirit Airlines

Note, however, that LGA is a small hub for Spirit – only 11 flights/day in and out. The gate areas at DFW were brand spanking new.

Many of the other flyers appeared to be of low to moderate income – I suspect a fair percentage are folks who couldn’t afford to fly were it not for Spirit’s rock-bottom prices (the base fare for my round-trip flight was an astonishingly low $86.18). As a shareholder, I’m delighted to see this, as it’s a large base of customers that the major carriers, as they rush to add seat-back screens, wifi and other perks – and jack prices up accordingly – aren’t serving well.

This also means that, as Spirit grows, it’s not primarily taking share from other airlines, but rather stimulating new demand from people who otherwise wouldn’t be flying at all. This, in turn, means the major carriers, over time, are less likely to engage in price wars with Spirit, as American (NASDAQ:AAL) has done in recent months (though there are signs that it is easing up). (For more on this, see my article, An Analysis Of The Price War Between American And Spirit Airlines.)

In light of Sprit’s high complaint rate, I watched closely for any signs of irate customers – and didn’t see any in either gate area or on either flight.

One thing that I’m sure would infuriate anyone would be to get hit with an unexpected $100 charge for a carry-on bag, but Spirit addressed this well in many ways:

  • First, on the web site when I booked the ticket, I could pay for a carry-on or checked bag for only $35 and $30, respectively (and even lower, $26/$21, for members of Spirit’s “$9 Fare Club”);
  • I received two email reminders about paying in advance for bags (the price is $40/$35 if you pay after you book the ticket but before online check-in; $45/$40 if after online check-in but before arriving at the airport; and $55/$50 at the ticket counter);
  • The gate agent made an announcement about 45 minutes before the flight, saying if you went back to the ticket counter, it was $55 for a carry-on and $50 for a checked bag; otherwise, it would be $100; and
  • Lastly, there was this in the gate area:

Whitney Tilson Spirit Airlines

If, after all of this, someone gets stuck paying $100 they didn’t expect, they have only themselves to blame. (I didn’t notice anyone paying this on either flight.)

As I walked down the gangway to the plane, a nice man greeted me – it turns out that he was one of five supervisors for Spirit at LGA and he read my recent article about Spirit, so knew that I was on this flight. We ended up chatting for 10 minutes while everyone else boarded the plane. He’s worked for Spirit for four years and says it’s a great airline – he really believes in its business model.

I asked about customer service issues/complaints and he said that anytime a customer files a formal complaint, every Spirit supervisor (not just at the airport it occurred) is notified so that they can all learn from it. I inquired whether Spirit gets many complaints for its $100 bag fee at the gate and he acknowledged that he sometimes he has to placate an irate customer about this – but has the discretion to charge the $55 ticket counter rate if need be. He also said that, with only one flight a day each way to Dallas, if there’s a maintenance issue, there are no backup flights to put passengers on (unlike, say, American, which has 12 flights daily each way). In this case, they book passengers on other airlines.

As for the flight itself, I paid an extra $50 for a front row seat on the outbound flight – and it was money well spent. As you can see from these two pictures, the seats are large, have lots of legroom, and recline (unlike the other 174 seats on the plane; about 20% more than other carriers):

Whitney Tilson Spirit Airlines

Whitney Tilson Spirit Airlines

Basically, they’re similar to first class seats on most domestic flights on other carriers – at a massively lower price.

On the return flight, I didn’t pay extra to reserve a seat, so I likely would have been assigned a middle seat at check-in (both flights were ~85% full), but the supervisor very kindly booked me in the second row (which is the next-best row because it has more legroom due to the first-row seats reclining). In short, I recommend paying $50 extra for a front-row seat or $14 extra for a second-row seat.

During the flights, the flight attendants hawked the Spirit MasterCard (lots of people asked for the brochures) and served drinks and snacks, which nobody seemed to mind paying extra for (a bottle of water or soft drink is $3), as this is well communicated. Here are pictures of the front and back of the menu:

Whitney Tilson Spirit Airlines

Whitney Tilson Spirit Airlines

Note the Coca-Cola ad on the menu – Spirit is always trying to raise a few extra dollars! Similarly, there were a handful of ads for a Vegas casino on the walls of the cabin – similar to what you see on the NYC subway car. Sure,

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