Spirit Airlines has been hit with a record civil fine for violating consumer protection regulations.
The U.S. Department of Transportation on Thursday fined the Miramar-based discount carrier $375,000 for failing to comply with rules governing denied boarding compensation, fare advertising, baggage liability and other consumer protection requirements. The civil penalty is a record for these kinds of violations, the DOT said in a media release.
Spirit bumped passengers from oversold flights but did not provide compensation or a written notice of their rights to compensation as required. Spirit also failed to resolve baggage claims within a reasonable period, on one occasion taking 14 months to provide compensation.
In addition, the airline violated DOT rules by providing compensation for delayed baggage only for the outbound leg of round-trip flights and only for purchases made more than 24 hours after arrival. Spirit also violated baggage liability laws for international travel by refusing to accept responsibility for missing laptop computers and certain other items it accepted as baggage, the DOT said.
The airline violated DOT rules requiring airfare ads to state the full price by omitting carrier-imposed fees from the base fare. Spirit also violated DOT rules by failing to retain copies of consumer complaints and by failing to file required reports in a timely manner, the DOT added.
Spirit serves Tampa International Airport with less than 5 percent market share.
“Selling fares for $9 has made us very popular and, a few years ago when we adopted this model, we had some growing pains during the transition,” Spirit spokeswoman Misty Pinson said in an e-mail. “We have addressed all the core issues that caused customer experience challenges a few years ago, including upgrading our computer systems and utilizing a new reservations partner.”
Customer service has suffered at Spirit in favor of cutting costs, said Stuart Klaskin, an aviation analyst with Coral Gables-based Klaskin Kushner & Co.
“I think, for a while, Spirit lost sight of the other factors in the travel experience outside just pricing,” he said. “In fairness, my impression is that they are taking steps to move the airline in a direction where the consumer experience is more positive from a travel perspective, and not just a price perspective.”
But, a reputation for poor service makes Spirit vulnerable to other low-cost carriers angling to compete with them, Klaskin noted. Carriers such as JetBlue and Southwest are expanding their footprints and, given the choice to fly with a carrier that charges a little more money but provides a better customer experience, consumers will do so, he said.
“The great fallacy with low-cost airlines has always been that price wins,” Klaskin said. “There is a service element, too.”