Last Updated Feb 18, 2010 8:44 AM EST
The idea is simple, and I'm surprised others haven't tried it already: Spirit publishes how much it costs to fly each butt around the country, assuming 80 percent of seats are full. Flying 200 miles costs less than $11. But those transcontinental flights? It costs $78 in gas alone to send one person 2,000 miles.
There clearly are benefits to this plan. If someone sees a $99 one way fare from LA to Ft Lauderdale, they might be shocked at the relative value they're getting, since about 80 percent of that amount goes straight to fuel. Throw in the absurd taxes that plague the industry, and there's very little left for the airline to actually run itself. So the customer will think that he's found an incredible steal.
On the other hand, that customer may also wonder how the heck Spirit pays for minor things like, oh, say maintenance, with a fare that low. The reality, of course, is that Spirit, like every airline, charges a range of fares on each flight, and when you add it all up, it should all equal a profit. Even if it doesn't, the airline also charges a variety of fees for just about everything once you arrive at the airport, so they'll make it up that way. But all that may not run through the average customer's mind.
Price transparency also has the potential to anger people if when fuel prices drop but fares don't follow. If Spirit sold me a seat for $99 when fuel cost $78, why won't they drop it $10 when fuel hits $68? The reality is that today's costs don't necessarily factor into the equation when prices are set -- it's all about maximizing revenue -- but again, the average customer doesn't get that.
So there is some good and some bad with a strategy like this. As someone who prefers more information than less, I like this move. But then again, I'm not your average customer.
(Hat tip: Rick Seaney)