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An Airline for the 99 Percent: Spirit Airline CEO Speaks Out

Locations in this article:  Atlanta, GA Chicago, IL Dallas, TX Fort Lauderdale, FL Las Vegas, NV Philadelphia, PA Pittsburgh, PA St. Louis, MO

PG: Let’s talk about deregulation. Because that was 1978. Seven years later, you came into the industry as an intern. Give me your job history in the airline industry.

BB: I went to work out of college for American Airlines in 1986. First as an intern in 1985 and then full time in 1986. And I went to work in their finance department. In the ’80s– American was a great place to be. Bob Crandall, who was running American at the time, had pretty much figured out how deregulation was likely to shape the industry before many of his peers did. American fairly aggressively hired younger people with MBAs. He basically expected the finance department to review most of the major things the company did for financial viability.

Working in the finance department at American in the ’80s I got to learn about how to measure route profitability, how to determine the economics of airplanes, how to look at– collectively bargained labor agreements and what are the economics of those, I got in frequent flyer economics, I got involved in a lot of things. And it was a great place to be.

PG: If you listen to– to Bob Crandall today, he said, “The airline business is a bad business. It hasn’t earned back its capital investment since the Wright Brothers.”

BB: Yeah, that’s right. But there are examples, like Spirit is now, of an airline that has bucked that trend because we take a different approach to things. And one of the reasons we’ve been able to take that approach is in part because we’ve looked around the world at what’s worked and what hasn’t, and in part because we had a strong set of owners before we IPO’d– who understood the business well. And we’d been able to stay true to what we’re tryin’ to be

PG: So in a world in which we’re seeing fewer and fewer airlines, less and less competition if you will, no routes that are overlapping to the point where airlines are no longer fighting for traffic they don’t even want anymore, right, what happens to the consumer here?

BB: The consumer is getting more and more choice in some ways. And ultimately, the consumer probably benefits well from a stable airline industry that is safe and that offers a range of different services from what Spirit offers, which is a basic service at a very low price, to something much, much better that costs you more. Just like a city may have all different kinds of restaurants or all different kinds of retail stores at different price points.

PG: Describe your airline as a restaurant, then.

BB: As a restaurant we’re probably McDonald’s.

You don’t go into McDonald’s and act surprised when you don’t see filet mignon on the menu at McDonald’s, right? You go in and you know what you’re getting–a clean restaurant, good service, a fair price.

You’ve got it all over the map. But consumers do better when they have choices at multiple price points. You’re wearing a very nice watch, right? You can go by a $29 Timex. You can spend tens of thousand dollars on a watch if you want. And at Spirit, we create a choice that without us, wouldn’t be there. A number of our customers we think– or we should say we know, wouldn’t even be able to afford their travel if we didn’t fly in the market.