United Airlines CEO Scott Kirby has repeatedly warned that Spirit Airlines is approaching a state of collapse. He warns of major headwinds facing the budget carrier. He restated that claim at an industry convening on Thursday in Long Beach, California. There, he continued to hammer home the point that Spirit’s discount airline model was unsustainable.
Kirby, a persistent critic of low-cost carriers, responded to this query posed by airline industry journalist Brian Sumers. Read on for his full explanation of why he thinks Spirit is doomed to go under. His answer was strong and simple, “Because I’m good at math. This comment really highlights his view on the profitability issues for low cost carriers.
Kirby then took the stage and blasted the traditional discount airline playbook. He pointed out how these airlines undercut on low base fares but then overcharge customers with fees for services that other airlines typically provide. He mentioned how this type of model often underwhelms the customer and eventually disappoints.
“You can’t have a business model that customers hate. You can’t have a business model predicated on ‘screw the customer’” – Scott Kirby
Kirby further explained that the robust growth that discount airlines have traditionally depended on to turbocharge their profits is now a thing of the past. He pointed to the successful launches of basic economy fares by their larger competitors. These new fares have lots of shiny add-ons, including the ability to carry on bags and choose a seat. These advances make it easier for consumers to see a more attractive option than the race-to-the-bottom low-cost model.
His skepticism about Spirit Airlines goes back a long time. In fact, not even a full day before his comments in Long Beach, he’d been criticizing the flaws of discount airlines at a different aviation event in Washington, D.C.
In response to Kirby’s comments, Spirit Airlines doubled down on their commitment to superior customer service. A spokesperson for the airline stated, “Scott is finally right about something – it is all about customers.”
With increasing pressures from rapidly changing industry dynamics and consumer preferences, the future operating model of discount airlines like Spirit is unclear. Kirby’s statements point to larger concerns among the aviation industry. This relentless pursuit of low fares often erodes the long-term value of customer experience across all models.