Booth offers some great first-hand experiences where in-the-classroom lessons and real-world situations align. Recently Professor John-Paul Rollert wrote a disapproving essay for The New Republic entitled, “Dispirited” after he encountered the infamously “shady” and “scandalous” service while flying Spirit Airlines between New York and Chicago to teach a course at Booth. Spirit CEO Ben Baldanza, disagreeing with the article’s premise, invited Professor Rollert to a debate. Eric Zorn, op-ed columnist at the Chicago Tribune, was chosen to moderate.
I’ve been taking a course called, “Strategy and Structure: Markets and Organizations,” taught by Professor Elisabeth Pontikes. The class discussed how from its start in 1999, JetBlue’s strategy was centered on providing high quality service at a low cost. It accomplished this by focusing on underserved markets and leveraging new technologies. We considered it a “disrupter” of its time - JetBlue had a radical new strategy (and supporting structure, of course) that established airlines just couldn’t copy.
Fast forward to 2015. Spirit President and CEO, Ben Baldanza, considers Spirit Airlines the latest market disrupter. Unlike JetBlue, Spirit Airlines does not actually aim to provide a high-quality service, but like JetBlue, it does aim to meet the need of low-budget travelers. It has built a unique model to support this; it’s method of al la carte pricing and bare-bones service is infamous today.
All in all, the relevance of this topic to my recent coursework coupled with the entertainment factor of a Business Ethics Professor debating a high-profile CEO made attending this event a no-brainer!
Professor Rollert kicked off the conversation, claiming Spirit takes the “Buyer Beware” mantra to an unethical extreme; it takes advantage of its customers’ need for low-cost transportation by making it incredibly difficult to understand what services consumers are entitled to at each price.
I won’t go into too much detail - Professor Rollert’s points echo the complaints of almost anyone who has flown Spirit (plus, his article is an intriguing and fun read). What I found interesting were a lot of Baldanza’s responses.
Baldanza started by stating that Spirit is “Ultra Low Cost” because its customers care about price over all else. He argues that no one actually flies commercial for the fun of it, they fly to have fun at their destination. Because of this, it is Spirit’s responsibility to remove all of the “extras” that are included in traditional airplane tickets and just charge customers for what they need - getting from place to place - even if that means charging extra for carry-ons, ticket printing, and oxygen on the plane (just kidding).
Later in the debate, when Rollert brought up the extraordinary amount of complaints logged against the airline, I thought Baldanza replied with a particularly compelling statement, “Any passenger who flies Spirit is logging a complaint against traditional airlines.” He asked the audience to consider what people do rather than what they say - individuals may complain, but they still fly Spirit (he boasted how full individual Spirit flights are in comparison to other airlines).
It begs the question - does a company need to be “likable” to be “successful?” I’m interested in finding out how much Spirit cares about its image. Is it taking steps to remediate the pricing-transparency issue? Their poor customer service? Or, like many other disrupters (think Uber and the taxi industry), is it banking on complaints subsiding as more people understand their offerings and business model?
Good questions to ponder at Gleacher on a Saturday over lunch!
Jackie DiMonte | Current Weekend MBA Student