Spirit Airlines executives used to say they wouldn’t fly to Charlotte. That’s partially because two previous CEOs, who ran the airline for a dozen years, came from US Airways, which operated a Charlotte fortress hub that they perceived as largely impenetrable to competitors.
Things changed Tuesday, when Spirit announced it will operate daily flights from Charlotte to four destinations: Fort Lauderdale, Orlando, Baltimore and Newark. Service begins June 20. Spirit will use Airbus A319s and A320s on the routes, operating a single daily flight to each destination.
“What changed is we’ve grown – we’re a much larger airline and our product has changed,” said John Kirby, Spirit vice president of network planning, who himself worked at US Airways from 1992 to 1999, involved in capacity planning and scheduling.
Now, “the best opportunities are in large growing areas where we can stimulate new traffic,” Kirby said. Charlotte is the second largest metropolitan area where Spirit doesn’t fly, he said. Spirit, in the midst of starting up in rapid-growth boom towns, will start Raleigh-Durham service to seven cities on May 2. It will start service to Austin, Texas on Thursday.
Kirby said Spirit anticipates that in Fort Lauderdale and Orlando it can connect passengers to Latin America and the Caribbean, but he declined to estimate what percentage of traffic that will involve. Newark and Baltimore flights will generally not lead to connections, he said.
Once known for delays and cancellations, Spirit is now an on-time airline that finished second among the top 10 airlines in on-time performance in November, according to the most recent statistics posted by the U.S. Department of Transportation. Spirit posted an 82.1% on-time performance.
To improve reliability for passengers, Spirit has added spare aircraft and also is more likely to operate a route daily than once or twice a week. Kirby said Spirit is also willing to buy passengers a ticket on another airline if it cannot operate – even though Spirit lacks an interline agreement with American, meaning it would have to pay a relatively high fare.
Brent Cagle, aviation director at Charlotte Douglas, said the number of Charlotte originating passengers has grown 5% a year for the past five years. He said Spirit approached the airport to discuss new service late in 2018. Growing local traffic is “the thing that changed their mind,” Cagle said.
Additionally, the opening of new Concourse A in July brought nine gates at Charlotte Douglas, increasing the total to 114 gates. Spirit intends to lease one of the nine. The implication is that rather than operate four daily departures, it will operate nine or 10, normal daily capacity for each gate. First, “We’ll see how much Charlotte likes us,” Kirby said.
American --which merged with US Airways in 2013 -- carries 91% of all Charlotte passengers and fills its 674 daily flights with connecting passengers, Spirit will have to compete for the approximately seven million passengers who originate or complete travel at the airport, which handled about 47 million passengers in 2018.
American serves every planned Spirit route with multiple daily frequencies, and its basic economy pricing is designed specifically to compete with ultra-low-cost carriers. Moreover, additional competitors also serve Baltimore and Newark, routes where Spirit would provide a third choice.
A dozen years ago, two former US Airways executives, Ben Baldanza and Barry Biffle, emigrated to Spirit, where they led the creation of the U.S. ultra-low-cost airline segment. In the ensuing years, they and Bob Fornaro, another US Airways refugee who subsequently ran Spirit, carefully avoided Charlotte.
"We had worked at US Airways; we worked our hearts and souls out trying to fix it," Biffle said in a 2016 interview with TheStreet. “We weren't ULCC people and there wasn't 'ULCCs for dummies' lying around. We had to study Ryanair, AirAsia and Tiger {Airways}, and learn what they were doing. We had to intellectually learn that's where we wanted to go."
Baldanza served as Spirit CEO from 2006 to 2015. During that time, I asked him regularly about the possibility of serving Charlotte: in the early years he said repeatedly he would not consider it, given US Airways’ pricing power. However, in 2013, after Spirit began to grow in Dallas, Baldanza said in an interview with TheStreet that Spirit would look at Dallas/Charlotte, where the US Airways/ American could lead to pricing changes on the route.
When Baldanza left Spirit in 2016, Fornaro replaced him as CEO. Fornaro retired in 2018.
On Spirit’s January earnings call, Deutsche Bank analyst Mike Linenberg quizzed CEO Ted Christie about the wisdom of adding service in highly competitive markets. Linenberg said a planned Raleigh-New Orleans flight could face as many as four competitors
Christie responded, according to a Seeking Alpha transcript “When we do route selection, we are looking for places that we think are overpriced and underserved and sometimes that includes markets that have a lot of players in them already.”
Additionally, Christie said, “In some cases there's also going to be real estate or gate situations in certain airports that basically say to us, ‘Make a decision Spirit. What are you going to do? How are you thinking about your network opportunities? And when are you going to go grab them?’”
There may be instances, Christie continued, where Spirit may see an airport it likes, “and it's a place that if we don't move soon, then we might not be able to go back in there for a couple years.”
At the time, Spirit was in the midst of its talks with Charlotte.
