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CEO makes no apologies for how he runs Spirit Airlines

Spirit Airlines CEO Ben Baldanza has worked for airlines his entire career, but it was when he took over at Spirit in 2006 that he really started to make his mark.

Associated Press

Spirit Airlines CEO Ben Baldanza has worked for airlines his entire career, but it was when he took over at Spirit in 2006 that he really started to make his mark.

Spirit Airlines is the frat boy of the airline industry, known for provocative ads and a no-apologies attitude. But its CEO is more like the captain of a marching band. ¶ As a kid, Ben Baldanza practiced his trombone and launched mice into the sky on model rockets. Today, the airline CEO enjoys historical mystery novels and collects board games. ¶ A graduate of Syracuse University with a master's from Princeton University, Baldanza, 49, has spent his entire career working for airlines. But it is at the no-frills, fee-happy Spirit that he has made his mark.

The airline, based in Miramar, offers 150 daily flights to 49 destinations in the United States, the Caribbean and Central and South America.

Spirit was losing money until Baldanza took over as CEO in 2006 and transformed it into an "ultra-low-cost carrier." The company's new mission: charge cheap base fares, pack more people into planes and add fees for everything else. Baldanza recently visited the Associated Press in New York. Here are excerpts of the interview, edited for clarity.

Many Americans perceive flying as a painful experience. Why?

Because it is in many cases. (Laughter) There's a reality today that is just different than maybe 10 or 20 years ago. It can be annoying and take a long time to get through security. In many people's minds the industry has nickel-and-dimed customers and has added fees for a lot of things that used to be included in the base fare. We've helped lead that to some extent, although we like to think that we're a little different than the other guys because in every case we've added fees we've also correspondingly lowered our base fare.

Does Spirit annoy people?

I think we do in some cases. But I actually think we annoy people who don't fly us more than we annoy people who fly us.

Did you ever question charging these fees, saying the risk is too high?

In 2006, we decided we were going to run Spirit as an airline that competes on the basis of price and price alone. Making that decision made it easier for us to make other decisions about how to run the business that are probably very difficult for other airlines. You start asking yourselves, "Why would I put fewer seats on the airplane than the airplane can hold?"

What led to that decision?

At some point you've got to get tired of losing money. (Laughter) No, really. That's it. I mean the business wasn't working. We grouped every airline into two buckets: airlines that make money all the time and airlines that make money in good times but give it all back in bad times. The airlines that made money all the time were extremely high-premium airlines or extremely low-cost airlines. There was almost no one in the middle.

At what point does the price of oil make it impossible for Spirit to make money?

Our business model works at higher fuel prices. … Because the density of our airplanes is so high, we need to raise our ticket prices less than the rest of the industry. Between New York and Florida, for example, both we and JetBlue fly the A320 airplane. They put 150 seats on the plane, we put 178. If oil prices go up such that it costs $100 more in fuel to fly, JetBlue's got to get that over 150 people, we've got to get it over 178.

Do you think it would be great to run Delta or American and apply some of the lessons you've learned?

(Laughter) It's hard because those business models have a high cost structure that's a result of flying a mixed group of airplanes, having senior labor groups. They need the business traveler to make their business model work. At Spirit, in part because we're small, in part because we were willing to accept this, we don't do anything to attract business travelers.

What kind of boss are you? Do you consider yourself a micromanager?

When I need to be, but I don't like to be. I like to have people who are smarter than me working for me. If I'm better at finance than my CFO, then I don't really need him.

What keeps you up at night?

Big fuel price shocks, another 9/11 kind of event that changes the way people think about travel.

So how did you get your start at American Airlines?

I interned at American Airlines in their finance department and was really excited by the airline, the set of problems I had to deal with. In the mid 1980s, American Airlines was a fantastic place to be. Bob Crandall, who ran American Airlines at that time, clearly figured out what deregulation was going to mean for the industry long before anybody else did.

Window, aisle or middle seat?

When I travel for business I always want the aisle but if I'm traveling with my wife or with a friend I'm happy to take the window and let them take the aisle.

Are you willing to spend $8 to choose?

(Pause) Yeah, absolutely. (Laughter)

You've announced plans to charge passengers when an agent prints their boarding pass.

A large percentage of our customers buy their tickets online from us but a much, much smaller percentage check in online and we don't really understand why. Now we're trying to give them a reason. It not only saves us money in terms of printer ink but, over time, it could mean less airport real estate.

Spirit doesn't do much advertising but relies on controversial promotions. When former U.S. Rep. Anthony Weiner admitted to sending photos to women, you launched "The Weiner Sale: With Fares Too HARD to Resist." Bikini-clad pole-dancers recently drove around Los Angeles with a sign saying: "You can take me home for $9." Who comes up with these?

It's a joint effort. In general, we come up with most of the ideas we're using in-house.

Are you sitting around with a six pack of beer?

No. The media focuses on stories that people are interested in whether or not that's really news. Anthony Weiner dominated the news for a week while the country's going bankrupt. So why shouldn't we talk about Anthony Weiner?

CEO makes no apologies for how he runs Spirit Airlines 07/17/11 [Last modified: Sunday, July 17, 2011 5:30am]
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