Spirit Working To Pare Costs From Fares

Jan 7, 2009
By Andrew Compart

Spirit has been working with the U.S. Transportation Dept. to come up with a new “solution” that would let it separate more cost elements from its base fare, following DOT complaints that the carrier crossed the line on the department’s full-fare advertising rules last summer, airline Chief Marketing Officer Barry Biffle told The DAILY Jan. 6.

The DOT complaints eventually resulted in a DOT consent order and $40,000 fine in late December. Half the fine will be forgiven if Spirit avoids additional violations over the next 12 months.

The fine concerned two unusual fees that lasted only one week before the DOT’s unhappiness over how they were displayed compelled the ultra-low-cost carrier to eliminate them, at least for now. One was a “natural occurrence interruption fee” of $2.50, which Biffle said the airline created to cover the costs of refunds it gives passengers when severe weather forces flight cancellations.

The other was an “international service recovery fee” of $8.50. Biffle said Spirit came up with the $8.50 figure by taking the total of its overfly fees, and other taxes and fees it pays to foreign governments that do not currently show up on the ticket price — but rather folds into its fare — and dividing that total number by its total number of international passenger segments.

A third fee, labeled at first as a “passenger usage fee” of $7.90 and later a “convenience fee” of $5, lasted for a month and was assessed on all tickets not purchased at an airport ticket counter.

Biffle insisted that Spirit fully explained the existence and nature of the fees, including what costs they covered.

The problems with the DOT arose because, under the DOT’s full-fare advertising rules as written and established by previous rulings, carrier-imposed fees must be included in the advertised fare. Fees or charges can be listed separately from the fare only if they are levied by a government, are not percentage-based and are collected per passenger, with the existence and amount clearly indicated so consumers can determine the full fare to be paid.

Biffle, however, said it has worked out an understanding with the DOT that could allow it to bring its booking fee back. “They didn’t like the exact nuance of how we displayed it. We have worked with them to come up with a solution that we’re comfortable with,” he said. Now Spirit is evaluating whether to do that.

As for the other fees, Biffle said: “As a general philosophy, we still believe we’re right: that consumers should know what they’re paying for and be able to see it, and we should be able to break it out.”

“We are evaluating whether we want to reimplement the fees,” Biffle said, but the “convenience fee’ is the only one the airline has figured out how to display in a way that meets the DOT criteria.

Photo: Spirit

AVIATION WEEK Copyright 2008, The McGraw-Hill Companies, Inc. All Rights Reserved.

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