Spirit Airlines is expected to generate “impressive margin and profitability” as it continues to grow, in part due to its high number of fees which are not subject to federal excise taxes, according to a report filed by The AP.

Published: 15 Jul 2011

Spirit Airlines is expected to generate “impressive margin and profitability” as it continues to grow, in part due to its high number of fees which are not subject to federal excise taxes, according to a report filed by The AP.

More ways to save

The airline has asserted that in every case it has added fees it has also correspondingly lowered its base fare.

For instance, last month Spirit Airlines started giving customers the option to save $5 each way by checking in online or at an airport kiosk to print their own boarding pass. Spirit said it is lowering fares on all non-stop flights by $5 each way from November onwards, providing savings for customers checking in online and printing their own boarding passes. Customers who choose to have their boarding pass printed by an agent will be charged $5. As a result, those who prefer having an agent print their boarding pass will see no change in their total price. Spirit says it wants to give its customers the ability to choose the extras they want without forcing them to pay for add-ons they don’t want or need.

“Why would you want to pay for services you don’t use? Sure, we could charge more and include everything in a high fare, but that presumes that all customers want all options,” Ben Baldanza, president and CEO, Spirit said then. “Imagine if you went to a restaurant and all the meals came with dessert. That’s great if you like dessert, but if you don’t, you would prefer the option to pay less for the meal and not take the dessert.”

Awareness about fees

In the same report by the AP, when asked about the awareness about Spirit’s fees, Baldanza said: “I think we almost over-disclose on our website and the vast majority of tickets are bought on our website. It's almost to the point where I think we have a surgeon general warning on it that you shouldn't fly, you'll have lung cancer.”

“The biggest complaints we get about disclosure are from people who buy from sources other than our website. We give Orbitz and Travelocity all the information about our fees. Whether they choose to pass that information on is their choice. The government gets mad at us, yet they'll let the third parties sell our ticket and not disclose. That's unfair.”

In the first quarter, Spirit earned $7.8 million and analysts forecast it will earn $11 million in the second quarter.