One new start-up airline offers in-flight music videos, purple and pink mood lighting and flight attendants clad in chic all-black outfits. Another rolls up staircases to planes instead of covered jet-bridges, charges for water and puts its flight attendants in T-shirts advertising destinations.
Together, high-brow Virgin America and low-brow Skybus Airlines show how the low-cost airline industry is maturing in the U.S. Once, start-up airlines all tried to fly a similar path: just copy Southwest Airlines, with its short, frequent flights, open seating, simple pricing and friendly staff.
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But now being a Southwest clone isn’t enough.
Like the retail industry, discount airlines are getting more specialized, trying to find niches that appeal to a certain type of customer, not to all customers.
“I think there will be lots of new variants we haven’t seen yet, for domestic and international service,” said airline consultant Patrick Murphy, a former senior Transportation Department official.
With so much discount-airline capacity in the skies, new entrants have to find a way to stand out — either by offering fancy service at relatively cheap prices or bare-bones service at ridiculously cheap prices.
“You either need to compete on price or compete on product. You can’t do both,” says B. Ben Baldanza, chief executive of Spirit Airlines, a 15-year-old low-cost carrier that recently has recast itself as an “ultra low-cost carrier” that charges for virtually everything, including water. (Air is offered for free in the cabin, Spirit sometimes jokes.)
Virgin America, which flies mostly between California and New York, plies the high end by offering fancy leather seats and a first-class cabin at cheaper prices than the others. The heavy entertainment offering also is a revenue-generator for the airline. Virgin America, launched by British entrepreneur Sir Richard Branson, offers some 45 movie choices on demand on seat-back screens, at $8 each. The 20 music videos are free, as are some live TV shows and music channels. But premium shows such as “Heroes” and “The Office” are sold at $1.99.
Skybus has no entertainment system in the back of its seats, and the flight attendants roll carts down the aisle selling food, along with perfume, watches, chocolates — anything to get a little more revenue. That allows the airline to offer 10 seats on flights for $10 a piece.
But the extra fees turn off some travelers. Gale Job was angry when Spirit charged her and her husband $40 to check four bags. “Checking bags is part of the service an airline should provide,” she said, vowing never to fly Spirit again.
Spirit also sells memberships to a “$9 Fare Club,” which costs $29.95 a year (you can join for an introductory $9). Spirit sends members e-mail alerts about unadvertised cheap fares — some $9, some even cheaper. Spirit says it has offered seats for only a penny each way (plus taxes and government fees) to various destinations. The program builds customer loyalty, brings in an extra $10 million a year in revenue and makes it harder for competitors to match Spirit’s cheapest prices because they aren’t published publicly.
Spirit’s Baldanza knows his airline’s no-frills policies will take some adjustment for customers. “We realize we’re either trendsetters or jerks, depending on your view of the world,” he said.