MIAMI — Spirit Airlines, America’s largest ultra low cost carrier (ULCC), has launched an innovative new frequent promotion entitled “Save More, Get More,” becoming the first US-based carrier (and the first worldwide) to reward passengers for spending less money on the carrier.

The promotion will run through the month of August (travel booked during the month), and on top of the existing miles that passengers earn through Spirit’s FREE SPIRIT mileage program, customers will earn bonus miles for spending less money on a Spirit base airfare.

The promotion also provides for additional bonus miles for members of Spirit’s $9 Fare Club. The full bonus mile earnings under the promotion are outlined below

  • Base Airfare <$75
    • 1,000 bonus miles (FREE SPRIT Members)
    • 2,500 bonus miles ($9 Fare Club Members)
  • Base Airfare $76 – $125
    • 500 bonus miles (FREE SPRIT Members)
    • 1,000 bonus miles ($9 Fare Club Members)
  • Base Airfare $126-200
    • 500 bonus miles (FREE SPRIT Members)
    • 1,000 bonus miles ($9 Fare Club Members)

The promotion doesn’t cost very much for Spirit and has a huge PR benefit

The first question to ask with any mileage promotion is how much its going to cost the airline, and in the case of Spirit’s mileage program, the answer is basically nothing. Our assessment finds that Spirit miles are usually redeemable at a rate of 20,000 miles for flights between $45 – $75 roundtrip, implying a value for Spirit miles of about 0.3 cents per mile.

As a point of comparison, the typical valuation for miles in programs like United Mileage Plus or AAdvantage is upwards of 1 cent and even 1.5 cents per mile, so Spirit’s cost for mileage promotions is extraordinarily cheap.

What this means, in the case of this promotion, is that the bonus miles for the highest case scenario (<$75 fares) are in total worth about $7.50, which is a pretty small cost. And in the case of Spirit, since their miles expire within three months, it’s actually likely that a significant proportion of the bonus miles awarded will evaporate.

The “cost” of the miles promotion to Spirit is the cost of future travel that they have to give away to customers in the future, and given the short redemption time, perhaps as much as a third of the miles awarded under the promotion won’t actually require Spirit to give up any free travel.

Conversely, the PR benefit to Spirit is massive. We’ve commented on this theme before, but a recent trend in the U.S. industry due to the low price of oil has been the winnowing of the actual fare gap between the ULCCs and the other legacy and network carriers in the United States.

This in turn, dilutes Spirit’s brand position as the ultimate provider of low fares in the U.S. and shines a spotlight on some of the more negative elements in Spirit’s customer experience. Now with Spirit making moves to improve its core customer service, this is a smart branding play that goes hand in hand and will get Spirit a lot of coverage that associates the Spirit brand name with low fares.

A secondary benefit is boosting short haul traffic

In practice, the average Spirit passenger isn’t going to get a ton of bonus miles here (most customers will end up with fewer than 2,000), but the bonus mile incentive here is definitely valuable on the margins (it might make customers more likely to book Spirit’s fares under $200. But because Spirit is using base fares instead of RASM (which wouldn’t make sense to be customer facing anyway), this doesn’t necessarily mean that this is going to encourage customers to buy fares that are less expensive on a seat-mile basis.

Actually, the main effect here is to boost the attractiveness of Spirit on the routes where its base fares are lowest, which is predominately short haul travel. If you think about it, short haul travel (think sub 500 mile routes) is also a space that legacy/network carriers are abandoning to focus on longer routes. They are also the segment where Spirit’s core product weakness is most irrelevant (braving 28 inch seat pitch on an hourlong flight is a lot more palatable than on a three hour flight).

In that sense, the net effect of this program, instead of rewarding customers for spending less money, is to boost the attractiveness of Spirit for customers in a market segment where Spirit wants to grow its share.