More than a quarter of Spirit’s flights are delayed. A new CEO is pledging better reliability.
Spirit Airlines Inc. is the carrier that leads the pack when it comes to customer gripes. With that in mind, its new boss is trying to repair one crucial aspect of the business: getting to your destination on time.
Spirit operated only 68 percent of its flights on time for the 12 months ended April 2016, as defined by the U.S. metric of a flight that gets to the gate within 14 minutes of scheduled arrival.
Chief Executive Officer Bob Fornaro says he’s been focused on reliability since his first day on the job six months ago. So has his board: In January, they amended executive compensation plans for 2016 to give on-time rate a 20 percent weighting in calculating managers’ bonuses, up from 10 percent.
“Over the years, we’ve never put enough emphasis on service,” Fornaro said June 20 in an interview with Bloomberg editors in New York. Now that’s changing.
Spirit’s official on-time showing improved to 73.8 percent in April but was still the worst in the U.S. airline industry and almost 11 percentage points below the average, according to the most recent Department of Transportation statistics. Spirit also canceled a higher percentage of its flights in April than any other carrier—1.7 percent.
Amid all these operational fixes, though, Spirit doesn’t want to get too good at showing up on time: A high on-time percentage can be expensive, especially for an ultra-low-cost operator. Getting closer to the 90th percentile means allotting more time for flights and ensuring everything goes right on the ground. Some airline experts equate it to “buying” on-time performance. This is why Spirit won’t challenge the industry leaders—Hawaiian Holdings Inc., Alaska Air Group Inc., and Delta Air Lines Inc.—at 90 percent and higher.
The goal is to find the right balance between cost and punctuality, the kind of calculus every carrier performs when building schedules.
“What is the right on-time performance number?” asks Steve Hozdulick, managing director of operational performance at Southwest Airlines Inc., which battled rampant delays in 2013-14. “What’s the right number to be competitive?” These are the questions airlines ask themselves.
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Published by bloomberg.com
June 27, 2016 — 6:00 AM EDT
Written by Justin Bachman
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