Feb 022012
 

Spirit Airlines insults us all with their latest fee and their feeble excuse for levying it

We’ve all of us yet to meet an airline fee that we like, but some are more odious than others.  The same is true of the airlines that levy the fees – some are more odious than others.

Winning this week’s award for most foul smelling odor is Spirit Airlines.

They have added a new $2 fee to every ticket issued, what they are calling the ‘Department of Transportation Unintended Consequences Fee’.  This gratuitous grab of another $2 out of our pocket is being excused by Spirit on the basis that the new DoT rule that passengers be allowed to hold flights for up to 24 hours prior to paying and, if they wish, can cancel them without penalty (assuming travel commences more than seven days out) is costing the airline presumably something like about $2 per every ticket they still end up selling.

This is male cow manure, pure and simple.

As justification/excuse, Spirit says that by holding a seat for up to 24 hours and then releasing it again, it might have lost a sale to some other person who wanted to buy the seat for real while it was being held for someone else.

On the face of it, you can sort of see their point, but there are three reasons why this concern is invalid.

Reason 1 Why Spirit’s Claim is Nonsense

This first reason is a bit complex to explain, so if you get lost in the middle, perhaps just accept its validity and evaluate the other two reasons as well.

Spirit is presumably assuming that the few seats that might be held for up to a day prior to being confirmed or cancelled represent the last remaining seats on each flight – as long as the provisionally held (and subsequently cancelled) seats don’t zero out the availability of more seats, it clearly is not losing any business at all.

So – what are the chances of the provisionally held then subsequently cancelled seats being all the remaining seats on the plane?  Close to zero.  Spirit operates A319s with 145 seats, A320s with 178 seats, and A321s with 218 seats.  Let’s say a typical flight has 178 seats on it.  And let’s say they average a stonking great 90% load factor on those flights.  Which means that, on average, there are 18 empty seats on a plane the day it departs, and of course successively more empty seats each day prior to it departing.

Now, remember that the one day hold rule only applies until one week prior to departure.  Let’s say Spirit sells 10% of its seats in the last week (I’ve no idea what the number is, but all the airlines claimed there would be serious problems if the one day hold rule applied in the last week, so it seems reasonable to infer at least 10% of sales occur in the last week).

That means on the last day that the one day hold rule applies (ie the eighth day prior to departure), there are 36 empty seats on a typical Spirit flight – 18 which will be empty when the plane leaves a week later, and 18 more which will be sold during the last week.

So Spirit would have us believe that on the day eight days prior to departure, it is holding more than 36 provisional bookings for each flight – that of the 142 seats sold prior to one week before departure, more than 36 of them are all bunched up on that magical eighth day.  Bear in mind this is a flight that has been available for sale for something like eleven months already.

Also bear in mind that only a small percentage of provisional bookings will cancel.  Let’s say half the bookings cancel (probably it is less than that.  Which might mean that Spirit is saying that of the 142 seats sold on that flight, it is holding 72 provisional bookings on the eighth day.

Does that sound even remotely likely to you?

And, if it does sound possible, the numbers get even more extreme with each previous day.  Let’s see how it works with just one more day.  If Spirit sells 36 seats on Day 8 prior, then on Day 9 prior, if it is to have the same problem on that day, it would need to be holding 144 bookings for the flight that day.  And more and more for each day backwards.  Within that single preceding week, it will have sold every seat on the plane – several times over!

Is that ridiculous enough for you?  Well, if you’re not already abundantly convinced, there are two more completely different sets of reasons why this is nonsense.

Reason 2 Why Spirit’s Claim is Nonsense

Cancellations are nothing new to the airlines.  This is why airlines oversell seats – to reflect the reality that not all passengers travel.

So if there are going to be a certain percentage of people who place 24 hour holds on seats and then cancel – and no-one is disputing this will happen – the solution is simple.  Adjust the over-booking profiles to reflect the projected percentage of speculative bookings that will cancel.

This is actually a very easy thing to do, because the overbooking period is only for 24 hours.  Once the booking has become unconditional, there’s no need to continue to worry about a cancellation, other than for traditional reasons that are already built into the overbooking algorithms.

So the adjustment to the current overbooking profiles is minimal rather than major, and only applies to a moving 24 hour window of bookings.

Reason 3 Why Spirit’s Claim is Nonsense

What goes around comes around, right?  So think about this – let’s assume that Spirit’s worry is correct, and it will start losing appreciable numbers of passengers due to some mysterious and maladroit way of Spirit handling the 24 hour hold provision.

But – this 24 hour hold applies to all airlines, not just to Spirit.  So at the same time they claim they are losing some passengers, they’ll also be picking up other passengers from other airlines who are losing their passengers for the same reason.  All that’s happening is a game of airline musical chairs.  AA loses a passenger who books on DL.  DL loses a passenger who books on Spirit.  Spirit loses a passenger who books on AA.  Net result – the same as before.

Upraising One’s Own Digit at Spirit

So, however you look at it, this new fee is absolutely not the ‘fault’ of the US Department of Transportation.  If Spirit is indeed losing passengers and money from the new 24 hour hold provision, it is only due to its own management ineptness, rather than the fault of the DoT, and it hardly seems fair we should suffer the consequences of their own limitations.

Someone suggested – and it strikes me as terribly irresponsible, so I’m mentioning it merely as something that you’d of course not want to do – that they were so outraged by this piece of fakery by Spirit that they were going to make and cancel a bunch of reservations.

How unfair is that?  Definitely a very unfair act.  But is it any more unfair than Spirit hitting us all up for another $2 and saying ‘The DoT made me do this’?

The Last Laugh

Actually, the last laugh goes against Spirit.  Thanks to the new DoT rule that requires the airfare to be shown as one aggregate total amount, all Spirit is doing is increasing its fares by $2, with the increase obvious to us all, rather than obscured, and in reality, the obscured part will be the blame it places on the DoT.

All we’ll see is that a Spirit fare has become $2 less competitive than it used to be, and hopefully that will encourage more of us to book away from Spirit and towards a decent fair airline instead.

  7 Responses to “Spirit Raises its Middle Finger at All of Us – Says DoT Made It Do So”

  1. Actually, there’s a 4th reason this is ridiculous nonsense. Airlines were required to give passengers 24hrs to cancel a reservation once booked (something they have conveniently not mentioned). So what’s happening here is that Spirit is now not getting the 24hr float on those dollars. It has nothing to do with ‘taking a seat out of inventory’. They just can’t ask for a credit card to instantly charge anymore, they have to wait 24hrs to charge it out. (In reality, they ought to be offering a discount for instant purchase, rather than a fee.)

    Spirit is not the bargain they make themselves out to be. Unless you’re flying naked and don’t care about where you sit (what’s the point of advance seat assignments? they shoehorn you in anyway), the fees will kill most of the “discount”.

    And just for good measure… If you bought an airline ticket on an airline that a travel agent could book through their GDS, you always had 24hrs to purchase a ticket – there are very, very few fares that require instant purchase (most of those being in markets outside the US, so US rules on ticket purchases has no bearing anyway). It’s only been on airline websites where this “instant” purchase stuff has taken place, and only because the airline didn’t give you a choice.

    Websites are your best friend? Bah. Find a good travel agent and you’ll be much better served. Consumer beware.

  2. Good analysis, but I think there’s another reason not covered here. By going to a 24 hr cancellation policy, Spirit loses the ability to pocket those cancellation fees and forfeited tickets when customers make a mistake or change their mind right after making a reservation.

  3. I agree. Who believed their gimmick-ads for $9 fares? Some airline on a busy route with competition should try selling all tickets on the plane for one price and junk the seat fees, baggage fees, change fees, etc. It used to be that way on the East Coast and West Coast shuttles [BOS-LGA-DCA, SFO-LAX] before the coming of sophisticated load management computer programs. And some airlines made money by flying and serving passengers! Does load management really maximize revenue?

  4. Wow. Sounds like Soirit is being coached by the head of Ryanair… 🙂

  5. Spirit gives new meaning the the term “pillage and rape”, with the 40 pound luggage weight limit even for international flights. Not even water or soda escapes their charge. The only thing left free is toilet paper, but I wouldn’t be surprised if they put locks on the bathrooms and demand your credit card number before opening them.
    I’ll rent a car before ever flying with those swine again.

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