In Defense of the "Heartless" Spirit Airlines CEO


This week Spirit Airlines (NAS: SAVE) CEO Ben Baldanza took it on the chin for his refusal to refund Jerry Meekins, a military veteran, his airfare after he was diagnosed with terminal cancer that disqualified him from flying.

Baldanza eventually relented, personally reimbursing Meekins for his $197 ticket. Still, the sheer spectacle was a shame, and I think Baldanza's original refusal was unusually courageous and correct.

No, it's not because my parents didn't love me as a child, or that I'm anti-military; I very much appreciate Mr. Meekins' military service.

It's because -- when you stop and think about it -- refusing was the right thing to do when you take into ethical consideration all of Spirit's passengers, employees, and owners.

The media, as usual, automatically took the most sympathetic stance and oversimplified things in order to win approval. And once again public discourse took a blow for it.

Why be so "heartless"?
An airline ticket is a contract. Like all contracts, it comes with terms and conditions. A very common term and condition -- shared with Delta Airlines (NYS: DAL) and Southwest Airlines (NYS: LUV) -- is a non-refundable fare, which applied in Mr. Meekins' case. To the best of my knowledge, Mr. Meekins has never denied knowledge of the non-refundable nature of his ticket.

(One thing he did deny, however, was the optional insurance that would have allowed him to get a refund in a medical situation like the one he encountered.)

So what Mr. Meekins was really asking for was a special exception to the rules. He hoped his extraordinary character and condition would overrule his contractual obligations.

But it shouldn't.

Military service is morally virtuous, but being morally virtuous doesn't give you license to renege on your agreements with others. Lots of morally virtuous people are denied special refunds or other special treatment by airlines.

Similarly, being diagnosed with terminal cancer is horrible, but being in a horrible state doesn't exempt you from your obligations to others (provided you are still capable of fulfilling them).

You might say this view is unremittingly harsh or tone-deaf, but refunding a cancerous veteran is not a victimless act.

The money that Mr. Meekins wanted Spirit to pay has to come from somewhere. That "somewhere" means Spirits' passengers if it has to charge more to compensate for refunds, employees if that means lower wages, or the shareholders if it means lower cash flow.

None of these stakeholders caused Mr. Meekins to get cancer, but all could be made to suffer for his and others' unwillingness to abide by the rules.

Is this right? (The principle is the same whether it's $197 or $197,000.)

In the end, Mr. Baldanza stepped up to the plate and became the "somewhere." But he shouldn't have had to, and Mr. Meekins should never have expected it.

At the time thisarticle was published Fool contributor Chris Baines is a value investor. Follow him on Twitter, where he goes by @askchrisbaines. Chris' stock picks and pans have outperformed 96% of players on CAPS. He owns no shares of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Southwest Airlines. The Motley Fool has a disclosure policy.
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