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Spirit Flouts Unwritten Washington Rule by Badmouthing Regulator

Most U.S. airlines quietly complied with U.S. rules that took effect Jan. 26 requiring them to include mandatory taxes and fees in published fares.

Spirit Airlines (SAVE) took a different approach, obeying the rule while issuing a press release and an e-mail to customers criticizing the U.S. Department of Transportation and a U.S. senator who struck back at its comments.

The ferocity of Miramar, Florida-based Spirit’s offensive, which included a red-exclamation-pointed ad on its website accusing the Transportation Department of forcing airlines to “HIDE taxes in your fares,” startled some communications experts who said it violated a tenet of doing business in Washington.

“It’s never a good idea to take on your regulator even if you have a good case,” said David Bartlett, a senior vice president of Washington-based Levick Strategic Communications LLC. “It puts you in a bad position, usually unnecessarily, because the regulator has all the power.”

A day after Spirit issued its criticism, the Transportation Department announced a $100,000 fine against the airline for not properly tracking complaints about treatment of passengers with disabilities.

Bill Mosley, a department spokesman, said there’s no connection between Spirit's criticism and the timing of the fine. “This goes back to May 2010,” Mosley said.

‘Zero’ Risk Seen

Spirit Chief Executive Officer Ben Baldanza, in an telephone interview, said the broadside carried “zero” risk because it has sued the transportation department to get the new rule thrown out.

That’s not necessarily true, said Scott Sobel, president of Media and Communications Strategies LLC, a crisis communications firm in Washington.

“There’s a big difference between going through a system, like in a lawsuit, and criticizing a regulator outside those channels,” Sobel said. “It’s always risky to criticize government regulators outside the expected channels.”

Southwest Airlines Co. (LUV) and Allegiant Travel Co. (ALGT) are also asking the U.S. Court of Appeals in Washington to void the regulation.

AT&T Inc. (T) in recent weeks has criticized the Federal Communications Commission in connection with the agency’s rejection of the company’s proposed $39 billion purchase of T- Mobile USA Inc.

AT&T’s situation is different from Spirit’s because the telecom giant had lost its case at the commission and may see value in building political support by speaking out, Levick Strategic’s Bartlett said.

Boxer Fires Back

“And it is to some degree still fraught with peril,” Bartlett said.

Mike Balmoris, an AT&T spokesman, didn’t immediately return a phone call and e-mail seeking comment.

The new DOT rules require Spirit and other airlines to give the total cost of a fare and taxes upfront. Some carriers had advertised base fares while revealing taxes and fees in fine print or after an online shopper clicks to a new Web page. Consumer advocates have said the rule will curb bait-and-switch advertising.

As of Jan. 26, some airline websites, such as the one for US Airways Group Inc. (LCC), displayed the total price of a ticket along with a breakout of fare and taxes for each flight searched.

Senator Barbara Boxer, a California Democrat, sent Baldanza a letter Jan. 26 accusing Spirit of “a deliberate attempt to deceive the flying public.”

“Your recent statement that ‘the better form of transparency is to break out costs so that consumers know exactly what they are buying’ is exactly what this new DOT rule will help do,” Boxer, a mmeber of the Commerce Committee’s aviation subcommittee, wrote.

Spirit Backed

The government fined Spirit $375,000 in 2009 for unfair or deceptive practices and $50,000 in 2011 for deceptive pricing.

The airline is “disappointed” in Boxer’s letter and wants to meet with her “and discuss facts so she is fully informed,” Misty Pinson, a spokeswoman for Spirit, said in an e-mail.

Spirit is “raising an important point” by calling attention to impact of taxes and other U.S.-mandated fees on the cost of air transportation, said Steve Lott, a spokesman for Airlines for America, a Washington-based trade association.

Airline tickets are subject to as many as 17 taxes and fees, in addition to discretionary charges such as those for checked bags, Lott said. In some cases, such charges for domestic travel can exceed 20 percent of the cost of the ticket, he said.

“We’re on par with sin taxes,” Lott said in a telephone interview.

‘Not That Paranoid’

Baldanza said Spirit’s strategy of using provocative advertising wasn’t behind airline’s reaction, though it did influence a “hidden tax sale” that deliberately made it difficult for consumers to find fares. That’s because the government is making it difficult to present costs in a transparent format, a Spirit Web page says.

Baldanza declined to comment on the fine issued Jan. 27 other than to say he didn’t see a regulatory payback.

“I may be paranoid,” Baldanza said. “But I’m not that paranoid.”

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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