Spirit Airlines (SAVE) inspires a special kind of wrath among the American traveling public: it’s the leader in customer complaints for the industry by a wide margin. Over the last five years, Spirit’s rate of complaints to the U.S. Department of Transportation was three times higher than other U.S. airlines, according to a report [PDF] out today from the U.S. Public Interest Research Group Education Fund.
This is not the first time Spirit has been dinged for customer dissatisfaction. Last year, Spirit was the lowest-scoring carrier in a Consumer Reports survey of 16,000 readers. “Poor service, poor communication, poor quality,” a commenter at airline rating firm Skytrax wrote this week. “You couldn’t even make up how bad they are.” The loathing has also inspired a dedicated Twitter, @hatespiritair.
Its customers will probably find this annoying, too. In spite of the rancor it inspires, Spirit has become the most profitable U.S. airline in terms of its operating margin and return on invested capital. Spirit’s 16.2 percent margin is highest among U.S. public airlines, as is its 26 percent return on capital, according to Bloomberg data. Allegiant Travel (ALGT), the nation’s other ultra-low cost airline, had the second-best operating margin, 12.7 percent, followed by Alaska Airlines (ALK) and Delta (DAL). Spirit shares have gained 439 percent since its mid-2011 public offering at $12.
“Customer complaints generally have a loose but inverse negative correlation to return on invested capital,” Wolfe Research analyst Hunter Keay said, noting that well-liked JetBlue, Virgin America and Southwest lag financially. “The commitment to make the customer happy costs money.” Keay says the low-cost model rightly treats airfare as a utility. “There really does not need to be a service component attached to consuming airfare,” he says.
To that end, Spirit, along with other ultra-low cost carriers, has done everything possible to drive ticket prices as close to zero as possible. The point is to attract new customers with low fares, then cram them into a spartan, cramped cabin, and charge them for any and all amenities: water, carry-on bags, seat assignments, and the like. Spirit’s planes pack far more seats in the cabin than do other airlines, 178 on an Airbus A320—28 more than the same plane at United (UAL) and JetBlue (JBLU). Nor do those seats recline.
On the flip side of this financial success, Spirit is still growing rapidly–it plans to nearly triple its 54-jet fleet by 2021. A cheap fare may be able to lure first-time customers, but it cannot necessarily keep them. Over time, if travelers increasingly dislike the experience, it’s possible that Spirit’s financial performance could stall. On the other hand, airfares are rising across the board (consolidation will do that), and plenty of people may decide that saving $100 or more is worth a little temporary indignity.
“Many of the DOT complaints about Spirit are driven by our customers not fully understanding that we offer unbundled fares that let them control how much they spend,” spokeswoman DeAnne Gabel said Thursday in an email. The airline has declared 2014 its “Year of the Customer”; the goal, she says, is “to reduce complaints by helping customers learn about how to fly Spirit to go where they want and keep more money in their pocket,” Gabel says. Spirit isn’t an airline for everyone, but so far, it hasn’t had to be.
