FORT LAUDERDALE, Fla. • Ben Baldanza, the CEO of Spirit Airlines, leans over his kitchen table, takes another look at the board and plots out his strategy.
He’s not thinking about new routes, extra fees or how to pare back service on his famously no-frills airline. He’s indulging his true passion: board games. At one point in his life he owned nearly 4,000. Today he’s whittled the collection down to 1,500 — still enough to fill one of the four bedrooms in his house.
These aren’t kids’ games, I learned on a recent Thursday night when I was Baldanza’s guest, along with Ted Christie, the airline’s chief financial officer and DeAnne Gabel, director of investor relations. They are elaborate affairs that take enormous concentration, careful planning, cunning and ruthlessness. Luck has very little to do with the outcome.
We play Power Grid, a game Baldanza, 52, selected. Players build a network of cities, buy power plants and purchase the oil, coal, garbage or uranium necessary to electrify the cities. The more you power, the more money you get. The best players, Baldanza notes, "connect the cities in the most efficient way."
The similarities to running an airline aren’t lost on me.
Spirit carries only 1 percent of U.S. fliers, yet has significant name recognition thanks to provocative advertising. Baldanza has increased the number of lines on Spirit’s route map by 73 since 2010, while doubling the size of Spirit’s fleet. He undercuts other airlines on base ticket prices, but turns a profit by packing more passengers into planes and then charging them extra for almost everything, except the cabin air. It’s a strategy that consistently produces one of the best profit margins in the industry.
Each player starts our game with $50, which Baldanza doled out before we arrived. I grab my stack.
"Do you mind if I count my money? It’s not that I don’t trust you..." Before I can finish, Gabel chimes in: "We all did too."
Passengers don’t necessarily trust Spirit either. They are attracted by low fares but then compelled to play a game of dodging fees. Some drive to the airport to avoid paying up to $16.99 extra each way to book online. Customer service is notoriously lacking, something Baldanza attributes to keeping costs low so tickets are affordable. Each boarding pass printed by an agent at the ticket counter costs $10. A bottle of water, free on most airlines, costs $3. Spirit has 24 different types of baggage fees, including ones for placing a carry-on bag in the overhead bin.
So, it’s not surprising that Baldanza sees revenue opportunity where others see controversy.
Would he allow in-flight cellphone conversations if the government lifts its prohibition?
"Sure," he says without hesitation. "If we can make money at it."
He notes that those fees would allow for lower ticket prices. He knows — and doesn’t care — that most Americans oppose such calls.
"People are only annoyed for a while," Baldanza counters. "They were annoyed that (Spirit’s) seats didn’t recline."
I soon learn that Baldanza ran a mini-training camp at lunch the prior day, teaching his executives how to play Power Grid. They even discussed letting me win— but then decided not to be that generous. I was at a major disadvantage.
"I feel like the guy who shows up at the airport not realizing that Spirit charges for carry-on bags," I mutter.
"You shouldn’t have bought your ticket on Orbitz," Baldanza shoots back.
Transparency remains one of Spirit’s biggest challenges. Passengers booking through the airline’s website typically understand Spirit’s business model. Those booking through third-party sites often don’t learn of the extra charges until they arrive at the airport. For instance, passengers who fail to pay in advance for large carry-on bags are dinged $100 at the gate.
Baldanza recognizes that Spirit needs to be "a little friendlier, meaning that more and more of our customers actually understand the model." He’s making a big push this year to better align expectations with reality.
As he buys up cities on the board game, Baldanza’s reasoning becomes clearer: If passengers see the fees as potential enhancements rather than punitive charges, they might be willing to buy more.
Earlier in the day, I visited Spirit’s headquarters — which incidentally sits next to a collection agency in a Miramar, Fla. office park. While there, I spied a framed copy of a profile I did of Baldanza three years ago with the headline: "Meet America’s king of airline fees." The word "fees" is covered up with a piece of paper saying "options." During a pause in the game, I ask him about the change.Next Page >
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