Why are airlines fighting hard to own Spirit?
June 24, 2022
By Rob Walker, FAST Company
What happens when your brand connotes cheap-o performance, bare-bones service, and routine problems and inconveniences — so much so that you’re pretty much the running joke of your industry?
If you’re Spirit Airlines, what happens is you find yourself the subject of a bidding war. Indeed, JetBlue doubled down on that outcome this week, raising its prior $31.50 per share cash offer for Spirit to $33.50, a deal worth an estimated $3.7 billion. JetBlue’s interest follows budget carrier Frontier’s $2.9 billion offer for Spirit back in February. (Spirit has postponed a shareholder vote on that deal as it considers JetBlue’s bid. The Frontier offer would involve a mix of cash and stock, and is now worth somewhat less as its share price has declined.)
It may seem puzzling that Spirit, a complaint magnet and punchline for years, suddenly seems to be the belle of the air-travel ball. Certainly some travelers are puzzled. “Hey, JetBlue shareholders,” wrote a commenter on a Washington Post article about the news. “Have you ever flown on Spirit? Worst experience of my 70 years of flying multiple carriers…..and you want to pay a premium for it?” Another adds: “Why?? Spirit is a dumpster fire.”
Among the curious, apparently, are JetBlue customers. “Many of you have been asking us about JetBlue’s proposal to acquire Spirit Airlines,” CEO Robin Hayes wrote in a recent email to the company’s TrueBlue (frequent flier) members, going on to list the “benefits” the deal would create for its “valued customers.” These include a greatly expanded network of destinations, but also promises of expanding JetBlue service and perks like better legroom and free snacks — which seems to suggest the Spirit fleet would be overhauled and the brand would be subsumed into JetBlue. (Those details haven’t actually been spelled out in either acquisition scenario.)
But it would be a mistake to conclude that all that’s really being targeted here is Spirit’s collection of routes. Instead, the unexpected bidding war speaks both to the surprising and counterintuitive strength of the Spirit brand — and to the current, and perhaps future, state of air travel brands in general as the industry struggles its way back to pre-pandemic volume.
As I’ve noted previously, despite its reputation as “a flying Waffle House,” Spirit has actually been a quite profitable business. This contradicts the common-sense wisdom that a punching-bag brand can’t last as a marketplace winner — but that’s because the common-sense wisdom can be wrong. There is often a considerable gap between what consumers say they want and how they actually behave. Spirit figured out that there’s a customer base that will put up with a lot to save a buck, and that turned it into “a brilliant business,” as one consultant told me. “Spirit is consistently incredibly profitable,” another airline business observer agreed. If that comes at the cost of being a constant source of late-night show jokes and memes, so be it.
At the same time, a (not so) funny thing has happened as the entire airline industry has wrestled with staffing issues, surly customers, and other business turbulence as travel demand has surged back to pre-pandemic levels. Dealing with any airline has become increasingly fraught. Airports are straining, too, and delays have been spiking at least since Memorial Day. Just this week United dropped 12% of its Newark flights, and American said it would stop flying to Dubuque, Iowa, and three other small cities. Stories of flight cancellations by the thousands, and furious travelers fuming at outrageous delays and scandalous customer service (hold times of four hours or more, for instance) have become routine. “I will never take JetBlue again!” one raging customer, stuck at JFK for 48 hours after a cancellation, recently told the New York Post. “I will walk before I fly JetBlue!”
But before you worry about the airline business itself crashing, please note that, legions of dissatisfied customers aside, it’s doing just fine. Since April, the big carriers have consistently noted higher fares, and projected returns to profitability. Last month, JetBlue and Southwest both signaled higher-than-expected quarterly revenue ahead. Perhaps that’s one reason that, while brands are supposed to be humble and penitent in response to customer complaints on Twitter, that doesn’t always work with airlines: In a tweet that went viral, Delta flat-out told one kvetching consumer to “calm down and allow me some time to work.” Apparently that customer’s issue was eventually resolved, but it’s hard to miss the message that airlines won’t be groveling for your business anytime soon. At this point, Spirit’s infamous just-deal-with-it brand rep doesn’t look like an outlier; it looks like standard procedure for the whole industry. No wonder JetBlue can shrug off the supposed risks of acquiring a “dumpster fire” brand.
Back in 2020, I speculated that airlines might need to up their branding and customer care game in an environment made hyper-competitive by reduced pandemic-era travel. Maybe that was true for a time, but that time seems to have passed. Now something close to the opposite is true: More than ever, airline brands, with the exception of some newcomers like Avelo, have become nearly interchangeable. Vow “never again” on any carrier you want — but there’s little guarantee you won’t have largely the same experience with whichever rival you choose. The paring back of routes during the pandemic only limit your choices more (as, of course, will any mergers now or in the future).
In retrospect, the wisest comment I’ve ever heard about airline brands came a few years ago in response to widely reported outrage about a passenger being physically dragged off a United flight, prompting calls for a boycott of that carrier. “I will never fly United ever again,” Saturday Night Live‘s Colin Jost said during the show’s “Weekend Update” segment at the time. “Unless they have a cheap flight to wherever I’m going.” That’s the attitude that JetBlue — and the rest of the airline business — is counting on.