|The Bahamas Investor Magazine
January 21, 2010
January 21, 2010
“The Bahamas is a premier destination–most of our customers are leisure travellers, so having the country as one of the jewels in our crown is important to us. We go where people want to fly,” says Michael Pewther, senior director of sales at Spirit Airlines. “Geographically, The Bahamas is very close to the US, so it is easy for fast trips, for people who just want two or three nights somewhere.”
Spirit has been flying visitors into The Bahamas since it first began trading, under the name Charter One, in 1980. At that time the company, which was based in Detroit, offered tourist packages to The Bahamas, but it wasn’t until 2005 that the business, by then Spirit Airlines, increased its coverage to the islands with new routes from the US to Nassau and Freeport in Grand Bahama. Currently the airline offers customers flights between Fort Lauderdale and Freeport four times a week and daily flights linking four US destinations (Fort Lauderdale, FL, Myrtle Beach, SC, Boston, MA and Atlantic City, NJ) with Nassau.
The key to the airline’s success is its no-frills service at a reasonable price. “Nobody walks into a McDonald’s and expects to see filet mignon on the menu. We try to set people’s expectations. We give customers a basic product–a seat from point A to point B–and let them decide,” explains Pewther, who says that the airline is comfortable with its cheap and cheerful reputation and has built a significant business in The Bahamas due, in part, to this focus on customized, low-cost trips. “There are also a number of Bahamians that come back and forth to South Florida; and our prices are so low that they are attractive for those making that trip frequently.”
Budget carriers such as Spirit are increasingly dominating the air travel market, giving customers a wealth of choice when it comes to cutting costs. Director general of the Bahamas Ministry of Tourism and Aviation (MOTA) Vernice Walkine believes that the emergence of budget airlines has changed the way tourists think about their trip and how they plan financially for the journey.
“These low-cost carriers have caused the customer to see an airline seat as much more of a commodity. They would much rather spend their money in the destination. They are not prepared to pay more than they need to, so seats are now more of a brand item than they used to be,” she says.
The budget air travel market is very competitive and to stay ahead of its rivals Spirit is making the most of this prioritization of price by focusing on its key business philosophy: reliable service, clean aircraft, friendly staff and, above all, low fares. Offering these greatly reduced fares means keeping basic costs to a minimum by charging customers an additional fee for extra services such as comfortable seating, travel insurance and luggage allowance.
According to the airline, this allows passengers to customize their trip and gives them the power to control their spending. “We try to make sure that our airfares are the lowest out there. We unbundle our fares so people can have a choice,” says Pewther.
Benefitting The Bahamas
Keeping airfares low is not just a savvy business strategy for the airline but also a top priority for MOTA, which hopes that driving down prices will go some way towards countering the damaging effect of the global recession on visitor arrivals. MOTA has been working with low-cost carriers such as Spirit to tempt more tourists to its shores with affordable fares. According to Walkine: “Proximity is not reflected in the cost of access. If we were going to be successful at all in getting tourism to the islands, we needed to reduce the cost of airfare.”
In early 2009, the government announced the launch of the airfare reduction initiative (ARI)–a scheme to eliminate the added taxes imposed by the Bahamian government on airlines, thereby ultimately reducing the cost borne by the customer. Walkine predicts that total tourist numbers could rise by 12-15 per cent–good news for Spirit and good news for The Bahamas.
“We are in discussions with the Bahamian government about the ARI. They see the importance of getting people to come to The Bahamas and they also see that the way to do that is to make it attractive for them,” Pewther says. “When taxes are as high as they are, it can be an impediment. We applaud their initiative in meeting that challenge head on, and it also dovetails with our strategy to get people travelling with low airfares.”
It has not been established yet whether the scheme will become a long-term effort, but the government already has the full support of Spirit in implementing the changes. As Pewther says: “We are ready on our side.”
This new initiative is not the first time the airline has teamed up with MOTA with the aim of boosting visitor arrivals. In September 2008, Spirit began a new on-board advertising venture called Mile High Media, for which The Bahamas was its first partner. The project exposed passengers to a series of adverts on seat backs, tray tables and overhead lockers that encouraged them to visit the islands. This not only introduced The Bahamas to a new audience but was a significant boost to Spirit’s new business venture. Despite originally being intended for a two-month run, the project was extended to seven months to capitalize on its success.
“Mile High Media was a huge success for us. We have a great relationship with the Bahamian government, and we would love to get involved with the Ministry of Tourism again in some way,” says Pewther.
The company is confident of its position in The Bahamas and, although there are no plans as yet to increase coverage to the islands, the airline is hoping to build on its stable performance here in the near future. “The future will see more of the same for us in The Bahamas; we are well entrenched there.” says Pewther. “The Bahamas is good for us and we know we are good for The Bahamas. We want to be bigger and better there, while delivering consistently low fares.”