APEX Insight: Spirit Airlines, the ultra low-cost carrier known for its rock-bottom airfares and bare bones service recently announced the replacement of CEO Ben Baldanza. With new leadership under Robert Fornaro, what’s in store for the airline that everyone loves to hate and hates to love?
Spirit Airlines, the ultra low-cost carrier (ULCC) with a reputation for outrageously cheap seats announced Tuesday a new CEO, Robert Fornaro, had replaced Ben Baldanza who helmed the airline for the last 10 years. In a statement, Baldanza said, “this is the right time to implement an orderly succession plan,” and that Fornaro is the right person to lead the “next phase of growth.”
Joe Leader, CEO of the Airline Passenger Experience Association (APEX) agrees. “Bob Fornaro marks an incredibly strong pick by Spirit Airlines,” he says. “The change surprised the industry because Ben Baldanza crafted the Spirit Airlines we know today.”
Under Baldanza’s leadership, Spirit introduced Bare Fare – cut-rate prices for a stripped down service with zero perks attached. Basic amenities such as a reclining seat, overhead storage for a carry-on, drinks and water, cost extra on Spirit – a source of sourness among many passengers. Still, in 2014, Spirit was the most profitable airline in the US and The Wall Street Journal reported that the airline’s stock price was above $84. Then a year later, share prices fell by more than half.
“After the announcement, several industry publications cited Fornaro’s experience with mergers and acquisitions given his leadership in combining AirTran Airways and Southwest Airlines. Some of those publications suggested a similar integration with Frontier Airlines, but I think that jumps the gun. While integration may be considered in due time, I believe the appointment of Bob Fornaro as CEO simply marks a desire by the Spirit Airlines board to grow Spirit organically just as Fornaro cultivated AirTran Airways’ rapid growth against larger competitors,” says Leader.
“I believe the appointment of Bob Fornaro as CEO simply marks a desire by the Spirit Airlines board to grow Spirit organically just as Fornaro cultivated AirTran Airways’ rapid growth against larger competitors.” – Joe Leader, APEX CEO
Despite the CEO turnover, Leader believes Fornaro isn’t planning a dramatic overhaul and the ultra-low-cost model will stay. “Bob views the airline industry quite pragmatically,” says Leader. “It’s a remarkable business that must retain customers, employees and profitability for long-term health, at the same time, maintain its core attribute as an ultra low-cost carrier. I think Fornaro’s thoughtfulness for customers was captured by making AirTran the first airline in the world with in-flight Wi-Fi across its entire fleet years before competitors. I would not imagine a similar move at Spirit Airlines, but that action does capture the spirit of his philosophy.”
Yet, while the ultra-low-cost model will be maintained, a strengthened approach to the passenger experience may be in store. “At this point, Spirit’s passenger experience can only improve and that will have an impact on all airlines in the US and beyond,” Leader says. In the United States and abroad, low-cost carriers have made strides in the passenger experience sector in an effort to keep apace of an increasingly competitive market.
And Fornaro said in a statement himself: “Spirit’s focus will remain delivering a customer-friendly product and providing the lowest total price to the places we fly. I look forward to working with the rest of Spirit’s management team and team members to grow the company’s proven ultra low-cost model and drive value for all of Spirit’s stockholders.”