Ben has over 35 years of experience in the airline industry. From 2005 - 16 he was CEO of Spirit Airlines and is known for defining the ultra low cost carrier model after transforming the business to become the 7th largest airline in the US. Ben was previously SVP at both American Airlines and Continental Airlines and also led the restructuring of Avianca Holdings. He now consults with the largest US airlines and is an Adjunct Professor of Economics at George Mason University.
I had a number of challenges, running Spirit. First of all, we changed the business model of an airline. We probably lost every customer that Spirit carried before I got there, and brought in a new customer, over time. If you look at the demand, it looks as if we carried customers, but there was a big transition. We realized that we couldn’t compete with bigger airlines, doing the same thing they did. We set out a four-part customer commitment. We said, we’re going to have the lowest total price, we’re going to be clean, we’re going to be friendly and we’re going to be reliant. Then we just measured ourselves against all those things. We did better at some than others.
But what was really hard was dealing with the media and dealing with a customer base who didn’t necessarily like the changes or understood the changes and were very critical. We had lots of complaints, people who didn’t want to pay for their checked luggage, didn’t want to pay for food on board, didn’t like the unbundled nature of the product, even though that brought them a lower price. That took a lot of time.
The other thing was dealing with expectation changes, as the company started to be successful. When the company is in trouble, it’s amazing how employees will bind together, to allow the future to happen and do what it takes. But once the company is making money again, then expectations of what people should be paid and what should be included in compensation in that, and what customers expect, all start to change. Yet, if that changes the fundamental costs of the company, then it also changes how the company can be successful. What happened in a place like Spirit was, the challenges, at first, were stay alive, stay liquid – like the industry is right now. The second was, change the model to be successful, in this higher fuel price environment. That means, more utilization, drive more volume with an unbundled price structure, try to find ways to spend less money on things that customers don’t care about. Then the financial crisis hits and there’s not as much demand, so what do you do to recycle capacity and think about that?
Then the airline goes public and starts to become very, very profitable and now everybody wants to be paid more and vendors want an increase in their pay. I understood you could only pay me this much to fuel your plane in this airport before, but now you’re making more money, I need more money to fill your plane. There are expectations everywhere. At every point, in running a business, there’s a different set of pressures that come about. But what a good leader does is prioritizes really well.
I have a son who is 13 years old now. But from when he was about two years old, I used to tell him, it’s not good enough just to be busy; you’ve got to be busy doing the right things. Being properly prioritized is what good CEOs do. I won’t even say airline CEOs, because it applies to any business. What good CEOs do is they spend their time on the thing that’s most leveraged, to make the company stronger, make their earnings stronger, allow them to pay their employees more and be more influential in their marketplace.
You prioritize by trying to figuring out what are the most leveraged things you can do. I can certainly spend time doing things that keep me busy, but don’t matter so much, or I can spend time trying to solve the biggest problems the company has. I would have regular meetings with my management team. We would reprioritize constantly. What’s the most important thing for us to get done this week? What’s the most important thing waiting for me, to spend my time on, today? What do we need to have done by the end of this quarter, by the end of this year? Put those goal sticks out there and put those benchmarks out there and hit those targets regularly. That’s what you have to do, pick what’s most leveraged for your company.
This document may not be reproduced, distributed, or transmitted in any form or by any means including resale of any part, unauthorised distribution to a third party or other electronic methods, without the prior written permission of IP 1 Ltd.
IP 1 Ltd, trading as In Practise (herein referred to as "IP") is a company registered in England and Wales and is not a registered investment advisor or broker-dealer, and is not licensed nor qualified to provide investment advice.
In Practise reserves all copyright, intellectual and other property rights in the Content. The information published in this transcript (“Content”) is for information purposes only and should not be used as the sole basis for making any investment decision. Information provided by IP is to be used as an educational tool and nothing in this Content shall be construed as an offer, recommendation or solicitation regarding any financial product, service or management of investments or securities.
© 2024 IP 1 Ltd. All rights reserved.
Ben has over 35 years of experience in the airline industry. From 2005 - 16 he was CEO of Spirit Airlines and is known for defining the ultra low cost carrier model after transforming the business to become the 7th largest airline in the US. Ben was previously SVP at both American Airlines and Continental Airlines and also led the restructuring of Avianca Holdings. He now consults with the largest US airlines and is an Adjunct Professor of Economics at George Mason University.