Spirit Airlines Inc. flies to roughly 200 markets and says its ultralow-cost model would work in more than 500. Its new chief executive officer, Bob Fornaro, is ready to test that notion by starting flights to some smaller cities.
“Our objective is to be more nimble and less predictable in our [fleet] deployment,” Fornaro said on Tuesday. He used a quarterly earnings call to expand on comments he’s made about route expansion since taking over the top job in January.
The airline has about half its capacity in five large markets: Fort Lauderdale, at 30 percent, followed by Las Vegas, Los Angeles, Chicago, and Dallas. The rest is allocated to major cities with large populations, many of which also happen to be hubs for bigger airlines keen to keep Spirit away.
Yet as the Florida-based carrier grows from its fleet of 83 aircraft to 148 by 2022, it will need medium and small cities with leisure travelers—or potential leisure travelers, if the price is right to spur them to take a trip. That could mean service to places with a leisure-travel focus and airfares that can be high, cities such as Springfield-Branson, Mo.; Reno, Nev.; Colorado Springs; and Monterey, Calif. “If we can bring our model into that market and provide fares at a considerably lower price point and still be profitable,” said company spokesman Paul Berry, “that’s a market that we would consider going to.”
Spirit won’t comment on what cities, or which types of markets, it’s exploring. Berry said the airline will focus on leisure traffic. The first routes to mid-sized cities are expected to be announced late this year.
As part of this effort, the airline has already converted orders for 10 Airbus A321s to smaller A320s, scheduled for delivery in 2019. It’s also decided to retain the even smaller A319s in its fleet, purchasing three off the planes’ current operating lease, with plans to purchase or to extend the lease on one more.
Spirit’s potential migration into smaller towns comes as the big airlines are focused on trying to curb the ultralow-cost carriers’ expansion—especially when it crimps returns at major hubs such as Dallas, Chicago, and Los Angeles. American, for example, has been matching the lowest fares in many nonstop markets to compete with Spirit and Frontier Airlines Holdings Inc. And all three of the largest airlines now have, or plan to start this year, “basic economy” fares with fewer amenities to help combat Spirit and Frontier.
Fornaro, who was formerly CEO at AirTran Airways, has experience in smaller markets. AirTran had a diverse mix of large and small, flying to cities like Allentown, Pa.; Bloomington, Ill.; and Des Moines. Southwest bought the carrier in 2010 and subsequently left many of the smaller markets.
“We tend to fly to larger cities because that’s where the people are,” said Spirit spokesman Berry. “It also made us pretty predictable—you just had to look at the large cities to see where Spirit would go.” The new boss, he said, “doesn’t want to be that predictable to our competitors to know where we’re going to go.”
©2016 Bloomberg L.P. This article was written by Justin Bachman from Bloomberg and was legally licensed through the NewsCred publisher network.