In Defense of the "Heartless" Spirit Airlines CEO

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This week Spirit Airlines (Nasdaq: SAVE  ) CEO Ben Baldanza took it on the chin for his refusal to refund Jerry Meekins, a military veteran, his airfare after he was diagnosed with terminal cancer that disqualified him from flying.

Baldanza eventually relented, personally reimbursing Meekins for his $197 ticket. Still, the sheer spectacle was a shame, and I think Baldanza's original refusal was unusually courageous and correct.

No, it's not because my parents didn't love me as a child, or that I'm anti-military; I very much appreciate Mr. Meekins' military service.

It's because -- when you stop and think about it -- refusing was the right thing to do when you take into ethical consideration all of Spirit's passengers, employees, and owners.

The media, as usual, automatically took the most sympathetic stance and oversimplified things in order to win approval. And once again public discourse took a blow for it.

Why be so "heartless"?
An airline ticket is a contract. Like all contracts, it comes with terms and conditions. A very common term and condition -- shared with Delta Airlines (NYSE: DAL  ) and Southwest Airlines (NYSE: LUV  ) -- is a non-refundable fare, which applied in Mr. Meekins' case. To the best of my knowledge, Mr. Meekins has never denied knowledge of the non-refundable nature of his ticket.

(One thing he did deny, however, was the optional insurance that would have allowed him to get a refund in a medical situation like the one he encountered.)

So what Mr. Meekins was really asking for was a special exception to the rules. He hoped his extraordinary character and condition would overrule his contractual obligations.

But it shouldn't.

Military service is morally virtuous, but being morally virtuous doesn't give you license to renege on your agreements with others. Lots of morally virtuous people are denied special refunds or other special treatment by airlines.

Similarly, being diagnosed with terminal cancer is horrible, but being in a horrible state doesn't exempt you from your obligations to others (provided you are still capable of fulfilling them).

You might say this view is unremittingly harsh or tone-deaf, but refunding a cancerous veteran is not a victimless act.

The money that Mr. Meekins wanted Spirit to pay has to come from somewhere. That "somewhere" means Spirits' passengers if it has to charge more to compensate for refunds, employees if that means lower wages, or the shareholders if it means lower cash flow.

None of these stakeholders caused Mr. Meekins to get cancer, but all could be made to suffer for his and others' unwillingness to abide by the rules.

Is this right? (The principle is the same whether it's $197 or $197,000.)

In the end, Mr. Baldanza stepped up to the plate and became the "somewhere." But he shouldn't have had to, and Mr. Meekins should never have expected it.

Fool contributor Chris Baines is a value investor. Follow him on Twitter, where he goes by @askchrisbainesChris' stock picks and pans have outperformed 96% of players on CAPS. He owns no shares of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Southwest Airlines. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (10) | Recommend This Article (6)

Comments from our Foolish Readers

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  • Report this Comment On May 07, 2012, at 3:32 PM, seattle1115 wrote:

    "Similarly, being diagnosed with terminal cancer is horrible, but being in a horrible state doesn't exempt you from your obligations to others (provided you are still capable of fulfilling them)." Excuse me, but did you not in your lede note that Mr. Meekins was disqualified from flying? If you want to talk about contract law,, there is a colorable argument to be made that the contract in question here was voidable as a matter of law due to a mutual mistake of fact - specifically, the "fact" that Mr. Meekin would be physically ready, willing, and able to perform.

    But 1L contract law isn't the correct way to look at this issue. Rules, policies, and procedures are all well and good, but they should never be the whole story. A business is not obligated to adhere to its policies when doing so gives rise to an obvious ethical outrage. Furthermore, it's bad business. Did anyone think that this story would somehow not become a cause celebre? Didn't it occur to anyone that the company was creating a public relations nightmare for itself that would cost them in the long run? Has no one at the company heard the old saying about cutting off one's nose to spite one's face?

    Frankly, I'm appalled, both by the company's actions here and by this author's weak attempt to rationalize those actions.

  • Report this Comment On May 07, 2012, at 3:44 PM, cbaines2 wrote:

    Hey Seattle, I agree with you that it would have simply been easier and cleaner, and better business sense, to simply give Mr. Meekins his refund. But I don't think the media outrage was deserved when Spirit denied it.

    Chris Baines

  • Report this Comment On May 07, 2012, at 3:54 PM, setht23 wrote:

    I'm a current member of the Army on active duty, and I was really hoping Spirit would win this fight. Veterans groups that abuse their power are just as bad as other special interest groups. I feel for Mr. Meekin, but he knew what he was buying when he bought it.

  • Report this Comment On May 07, 2012, at 4:12 PM, Clint35 wrote:

    Hey Chris, I agree with you. But it sounds to me like maybe Spirit should do a better job of letting customers know about the insurance so they can get a refund if they need to. Meekins claims he didn't know about the insurance. But I also agree with Seattle that sometimes there are exceptions to the rules. Baldanza did a nice thing by refunding the money out of his own pocket. But he should've done it right away instead of doing it after the media attack. The real issue is the terrible way Spirit is running the business. Charging outrageous fees for everything under the sun. But I guess It's working, they're profitable and a lot of airlines aren't.

  • Report this Comment On May 07, 2012, at 4:24 PM, Calimesa wrote:

    The entitlement culture our country has grown is a big problem. Before reading this article I thought like most people who first heard the story but now I'm in agreement of the initial decision. We have forgotten how to live up to our agreements/promises/contracts.

    We are breeding a world of "you owe me" people, people who think they should get whatever they want without having to put out any effort to get it. I served 28 years in the military and retired Honorably and agree with setht23 about special interest groups abusing their power.

    Mr. Meekin had a right to ask for a refund but was wrong in letting it get out when his request was denied. Spirit Airlines may have been wrong in denying his request but a contract is a contract and this one didn't have a get out of jail free clause for either party. Think of this, would Mr. Meekin (had he been able to fly) let Spirit Airlines off the hook for providing him with a free ticket if the aircraft he was supposed to fly on broke down and he was delayed for a long time? I don't think so because that was part of the contract. Would they have tried to renege? Yes, because that's what everyone tries to do but when you lose don't go running to the media to plead your case if you're wrong.

  • Report this Comment On May 08, 2012, at 1:50 AM, sliderw wrote:

    Spirit Airlines should fully refund Mr. Keekins in installments over 30 years. That will give him another motivation to live long and thrive!

  • Report this Comment On May 08, 2012, at 9:17 AM, TheMagicMan wrote:

    seattle115, he was not "disqualified" from flying, his doctor had advised against it, so he drove six hours instead, which begs the question, if he was able to drive six hours how was his doctor ok with that over flying for two hours? I am a veteran too and sad to say I am embarrassed by his behavior, too much " woe is me" for my taste.

  • Report this Comment On May 08, 2012, at 1:11 PM, aets6621 wrote:

    Mr. Baines I understand your point of view regarding the contract, but there is always an exception to the rule. I am 99 99% certain that Spirit airlines was able to sell the seat that Mr. Meekins had and probably it was sold for more than the $197 he was asking for.

    For TheMagicMan, when you have cancer your immune system is very compromised. If you are in a confined space for a long period of time with 100 or more people, the probabilities that you will get some kind of infection are very high. That is not true if you are traveling in a car with only one other person. That is the reason behind the doctors recommendation.

    Calimesa, I don't think this has to do with entitlement culture. It is just common sense and a little compassion towards people that has served this country risking their lives for our freedom.

  • Report this Comment On May 09, 2012, at 1:09 PM, Shireguy wrote:

    There is a principle of "usability" when you buy a product or service. The assumption is if you buy something you should be able to take advantage of its features.

    Mr. Meekins bought something in good faith and, through no fault of his own, could no longer use it. That airline seat is a perishable commodity but it is available for Spirit Airlines to sell until the aircraft leaves the gate. aets6621's point is well taken! Spirit Airlines almost certainly was able to sell that seat to another customer so in effect they would have been paid twice for a service they are only providing once.

    If Mr. Meekins is bound so tightly to his contract with Spirit Airlines then perhaps Spirit Airlines should be required to leave the seat vacant if someone has paid for it and can't, for some reason, use it...........

  • Report this Comment On May 12, 2012, at 7:20 PM, jmar89 wrote:

    I agree with Calimesa and was also puzzled to read in an article where Mr. Meekins stated he would never fly Spirit Airlines again. Of course! If he is under Dr's orders and terminally ill he will never fly any airline again. Why would Mr. Meekins feel a need to make such a statement? Could it be that he is in better shape than advertised? Also, our selfless veterans who put their lives at stake are generally not "gimme gimme" folks. There's something wrong with this picture....

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