Ultra-low cost Spirit Airlines (NASDAQ:SAVE) leads its rivals by a huge margin when it comes to customer complaints. That might be expected with an airline that takes the concept of no-frills beyond what most passengers are used to, but the lead the company has over its nearest rival when it comes to customer dissatisfaction is staggering.
In 2013, Spirit had 9.44 complaints per 100,000 enplanements, an incredibly high figure, Statista.com reported. The complaints related to everything from delayed flights to issues with baggage. Frontier Airlines came second in 2013 with 3.09 complaints per 100,000 enplanements while United rounded out the top three with 2.14.
The rest of the top 10: American (1.99), American Eagle (1.7), US Airways (1.42), Pinnacle (.86), Skywest (.80), Airtran (.73), and Jetblue (.63).
What is Spirit and why are people so outraged at it?
Spirit is an ultra-low cost airline that charges customers for absolutely everything on an a-la carte basis. While paying for checked bags has become common, Spirit also charges for carry-on luggage. The company justifies this by offering low initial ticket prices then letting people add on whatever extras they need. This sounds good in practice but it leads to a lot of angry customers forced to shell out money at the gate for carry-on bags, which don't cost extra even on other low-cost airlines. (A personal item like a purse does not get charged, but the item must not exceed 16 x 14 x 12 inches including handles and wheels.)
"Our bag pricing gives you the freedom to only pay for what you bring. Pack light and save, especially if you only bring a free personal item. No hidden bag charges with us; we want you to only pay for what you use, not for what you don't," the company posts on its website.
That might be a sensible policy but the fee for bags increases based on when and where a customer pays the fee. Buy a carry-on bag in advance and people who are not members of Spirit's $9 fare club (which costs $59.95 a year and offers discounts as well as access to some cheaper fares) pay $35. Pay during the online check-in period and the same bag costs $45. Pay at the airport and the same bag goes for $50. If you think your bag meets the free criteria and you learn at the gate that you are wrong, you can dump your bag in the trash or pony up $100 at the gate to ransom your bag's way on board.
Spirit attempts to justify this practice on its website.
"Less bags use less fuel, and with our customers' help we reduced fuel consumption by over 6 million gallons in the past year alone. These savings allow us to care for the environment and keep fares low," the site reads.
That may be true, but you can imagine that a person forced to pay $100 at the gate because he didn't know how rigid the policy is might be a tad perturbed.
Spirit also charges extra for the sodas, coffee, tea, and water that are free on nearly every other airline. The carrier has also been known to use part of its flights to engage in a sales pitch for its branded credit card -- capitalizing on the fact that the audience can't exactly get up and walk away.
Has being complained about been bad for business?
Spirit may be disliked by customers but it's cheap and people seem willing to fly the no-carrier even if they know it's not going to be a great experience. For 2013 that company reported that adjusted net income for the full year increased 71% to $177.5 million.
"For the full year 2013, we delivered record profitability and return as demand for our low-cost, ultra-low fare model remained very high. These strong financial results reflect our vigilance on maintaining our cost discipline and low fare strategy while executing on our growth plan and delivering high returns for our shareholders," said Ben Baldanza, Spirit's Chief Executive Officer.
Spirit specifically had a tremendous fourth quarter with total revenue per available seat mile for the quarter at 11.43 cents, an increase of 3% compared to 2012. Passenger flight segment volume for the quarter also grew 19.4% year over year.
Complaints don't matter
Spirit has embraced a model that will lead to complaints. It's also a model where customers may not like the company but they clearly continue to fly on the airline. By not offering free services that the vast majority of the airline industry offers Spirit has chosen saving money over customer satisfaction. Basically by pinching pennies and passing savings on to its customers, Spirit has created a relationship where both customer and company make money.
That relationship may not be a very positive one, though. Spirit's customers would fly with other carriers if those carriers were as cheap, but they aren't. It's an odd model but it's one that works for Spirit. Correcting the things customers complain about costs money and spending money means raising ticket prices. Since Spirit's business model won't let it do those things the company is likely to stay atop the complaints list while continuing to bring in customers.
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Daniel Kline has no position in any stocks mentioned. He flew Spirit once and would be reluctant to do so again. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.