Spirit Airlines Faces Fines Over Ads

November 22, 2011 Updated Nov 22, 2011 at 9:20 AM EDT

By WKBW News
By Business First by Kevin Gale, South Florida Business Journal

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November 22, 2011 Updated Nov 22, 2011 at 9:20 AM EDT


Spirit Airlines has agreed to pay a $50,000 fine over some short-lived advertising as it continues a broader fighting against new federal rules about airline advertising.

The U.S. Department of Transportation announced the fine Monday, stating that rules require ads to disclose the full price to be paid by the consumer, including government taxes and fees. In billboards and print ads, an asterisk can be put near the fare, directing readers to look at the bottom of the ad for fees.

The DOT found that Miramar, Fla.-based Spirit (NASDAQ: SAVE) used an asterisk on billboards and handheld posters, which led to small print, but failed to disclose the amount of taxes and fees. The billboards and posters were announcing new service to Los Angeles.

The airline offers service from Niagara Falls International Airport and has helped trigger a wave of passenger traffic there.

Spirit also ran afoul by announcing $9 fares via Twitter, but not putting the amount of taxes and fees on the website the tweets linked to, the DOT said. Readers had to click on a second link to find out the fees.

This isn't Spirit's first run-in with the DOT. In 2009, the agency fined Spirit what it called a record $375,000 for failing to comply with rules governing denied boarding compensation, fare advertising, baggage liability and other consumer protection requirements.

Spirit, an ultra low-cost carrier known for CEO Ben Baldanza's cheeky advertising slogans and myriad add-on fees, is fighting the DOT's plans to include all government taxes and fees in every advertised fare, beginning Jan. 24.

In a Nov. 14 brief filed with the U.S. Court of Appeals for Washington, D.C., which hears regulatory agency complaints, Spirit argued that the DOT has limited powers on pricing and can only step in when there is "compelling evidence of consumer deception or unfair methods of competition."

Spirit, which is joined by Allegiant Travel Co. (NASDAQ: ALGT) in the case, argues that its right to free speech under the First Amendment to the U.S. Constitution is being violated.

The DOT, in essence, is banning a 25-year industry practice that separate airfares from government taxes, Spirit argues.

"It enables low-coast airlines to highlight the efficiency and cost differences between them and their higher-fare competitors," Spirit's filing said.

Fast-growing Spirit recently announced plans to order 75 Airbus A320s and reported profits of $27.7 million in the third quarter.

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