Spirit Airlines Executive Summary

Total revenue per passenger flight segment ("PFS") for the fourth quarter 2014 decreased 3.7 percent year over year to $127.91, driven by a 6.1 percent decrease in ticket revenue per PFS and a 0.3 percent decrease in non-ticket revenue per PFS. During the fourth quarter, the Company transitioned its onboard catering to a third-party provider under a revenue share agreement. As a result of this change, in the fourth quarter 2014, the Company recorded lower non-ticket revenue and correspondingly lower costs than it would have otherwise. (Spirit Airlines)

Introduction Spirit Airlines’ success is due to its unwavering commitment to be amongst the leaders in the Ultra-Low Cost Carriers (ULCCs) market in the United States. Spirit Airlines has committed themselves to target customers of the airline travel industry who want to pay the lowest base fare price possible for quick and reliable travel to their destinations. Spirit controls their ticket pricing by taking a “no frills” approach that strips out all the extra amenities from their base fare ticket pricing. This approach allows Spirit customers to control the level of air travel they desire by allowing them to add back and pay for only the amenities they want. Furthermore, as for amenities, the frills such as free Wi-Fi, a la carte meals,

During the 1990s Southwest achieved the highest average revenue and income growth rate and return on total assets and stockholders’ equity among all U.S. air carriers. Unfortunately in the fourth quarter of 1994 (October 1 – December 31, 1994) net income fell 47 percent compared to fourth quarter 1993. Southwest had not reported earning less than the same quarter a year earlier since the third quarter 1991. By the end of the fourth quarter 1994 Southwest’s stock had reached a 52-week low on the New York Stock Exchange closing at $15.75 which was down

Spirit Airlines is actually an economical carrier dominating the industry and it enthusiastically utilizes contributory revenues. Spirit brands itself an Ultra Low Cost Carrier (ULCC) and epitomizes floating on the low-cost. The low-cost and “pleased with it” reaction is now part of Spirit ’s no advertising, marketing cachet. The company was founded in 1964 as Clippert Trucking Company and is incorporated in Michigan. Spirit prides itself on having a few of minimum fares within the air service activity. Spirit further displays itself as a airline that enables customers to decide on precisely what they need to pay related additional products and services such as bags, advance seating option, and snacks. This pricing policy has reached a contentious

Since deregulation, the most influential driver of profit in the airline industry has been the control of ticket distribution (Shaw, 2013). Spirit Airlines, the leading ultra-low-cost, no-frills

Currently, Southwest Airlines Company achieved the higher net income in 2013 and widened its field of operations by the integration with AirTran Airways. It seems Southwest’s business is going pretty well. However, there are numerous problems from competitors who will cause negative effect on Southwest’ market leader position and market shares. This marketing plan will make a careful analysis of the current activities of Southwest Airlines Company, and then this marketing plan will create how the company develop Southwest’s market leadership and higher market shares within 5years.

Southwest’s primary competitors are JetBlue and Spirit Airlines. These two airlines, like Southwest, focus on innovation and low airfare costs. Among the largest airlines are American, Delta, and United. However, these mainline carriers are far from posing any major threat to Southwest. (Coulter, pg 253)

From the humble financial portfolio as a crop dusting outfit in the mid twentieth century, to the multi-billion dollar portfolio of a major airline in the twenty first century, Delta Air Lines has risen as a successful business. The airline industry is directly affected by outside economic conditions and is also cyclical in nature. These factors make it very difficult for airlines to make predictions to stay financially afloat. Delta has ridden the bumpy path of the last twenty years and managed to survive. In the past twenty years there has been many events that

Two of the largest competing airlines in America may seem to have a lot in common to a consumer’s eye: big commercial planes, friendly staff, one free carry-on bag, complimentary snacks. Maybe the biggest comparison of them all is how much of the airline market these two companies take up. But for every similarity, there must be a difference. Beyond contrasting ticket prices, there are many fronts on which to compare Southwest Airlines and American Airlines. To begin when the companies began, American Airlines was established approximately 40 years sooner than Southwest Airlines as a result of a merger. In terms of people, Southwest Airlines currently has just about half the number of employees that American does. However, to truly compare the two companies, the organization itself must be researched and analyzed. Southwest Airlines and American Airlines appear to be very different to this day in terms of organizational culture, team dynamics, and conflict and negotiation.

This proposal addresses the needed steps to be taken in order for Southwest Airlines to see continued growth in the airline industry. Southwest Airlines has been able to remain one of the most profitable airlines in the industry for an extended period of time. Even with the hindrance of the 2001 terrorist attacks involving airplanes and the U.S recession of 2008, Southwest has continued to see strong revenue growth. Meanwhile, other companies were experiencing major losses and in some cases folding. Southwest Airlines has capitalized on the company’s strength of being the top low cost

: On average, over 8 million people fly around the world daily and over 2 billion fly in the United States daily. Everyone wants non expensive flights, comfortable seating, and on-time flights. Spirit Airlines is an airline that prides themselves on provided very low costs to customers and they strive to be the most cost efficient airline in regards to their competitors. “Spirit Airlines was founded in 1964 as a Clippert Trucking Company” (https://www.spirit.com/history.aspx) and has grown to servicing beyond coast –to- coast and has transitioned to low-cost carrier and ultra-low cost carrier. Spirit Airlines transitioned to Airbus fleet and consists of A319s, A320s, and A321. The A319s has seats 145 customers, the A320 seats 174 customers,

Southwest was one of the most fuel sophistry airlines, but the continuing uprising fuel costs made the airline improve the fuel efficiency of its fleet by purchasing new Boeing 737-700s. They chose to purchase instead of rent to improve cash reserves and have less debt to total capitalization compared to other

Southwest Airlines was created in the late 1960’s by a businessperson Rolling King, and law school graduate Herb Kelleher, who sought a faster travel time between Houston, Dallas, and San Antonio, Texas (Dess, et al., 2014, p. C137). After overcoming all of the antagonism and legal problems of many major airlines, Southwest was able to take its first flight in 1971 (Dess, et al., 2014, p.C137). With a dedication and will power to grow the company, King and Kelleher sought out ways to increase growth.

There have been few inventions to change how people live and experience the world considerably as the creation of the airplane. Today, traveling by air has become the norm and it would be difficult to imagine life without it. Air travel has improved the way people are able to conduct business by shortening travel time and changing their thought of distance. The companies within the airline industry exist in a very competitive market. One of those companies, Southwest Airlines, features low-fare, no-frills air service with frequent flights of mostly short routes. Costs are kept down by the exclusive use of Boeing 737 aircraft, which allows for low maintenance costs and quicker turnaround times for flights, and by an emphasis on ticketless travel (Encyclopedia Britannica). This paper will address two segments of the general environment and how they affect Southwest and the airline industry; evaluate how Southwest has addressed two forces of competition; predict what Southwest might do to improve its ability to addresses these forces; assess the external threats affecting Southwest; discuss Southwest’s greatest strengths and most significant weaknesses; determine Southwest’s resources, capabilities, and core competencies; and analyze their value chain.

The pricing strategy does not really differentiate it from the competitors as value-based service is not provided by the airlines. The low-cost structure and revenue strategy of Spirit Airlines give it a sustainable competitive