Spirit Airlines, known for its extremely low ticket prices, is actually based on a business model that is less similar to most mainstream airlines. Several factors have to be considered when seeking to understand why a carrier like Spirit Airlines is able to offer such low fares, and some of these include cost structure, sources of revenue, and the service delivery model.
Top 10 Reasons That Makes Spirit “The Cheapest Airlines”
Spirit Airlines is one of the major airlines to offer the cheapest tickets for the convenience of the traveler. And, that too, very frequently. So, to know more, just read out the following reasons to get all the information about low-cost flying with Spirit Airlines.
No-Frills Service Model
It is easily explained by the fact that Spirit Airlines offers stripped-down service with few amenities included in their ticket prices. Spirit Airlines intends to offer only a fundamental traveling service deprived of such enhancements as are offered by other airlines. This results in a situation where passengers pay for the flight only, and in order to access other amenities, they have to incur extra costs such as seat preference, check-in luggage, and food and drinks. Such services are not core and do not necessarily have to be offered by the company as they only add the cost to the company’s total expenditures and thus enable Spirit to cut on these costs and offer its clients better prices.
Unbundled Pricing
This model includes an explicit low fare, with most of what used to be covered in the fare being priced separately as options/ Bell 2013. It can be said to be great benefits of the approach as it enables passengers to select and be charged only for the services they require. For instance, when a traveler does not require having a check-in baggage, he or she stands no risk of paying for the baggage. This model helps Spirit to keep low base fares while at the same time boosting its revenues through other services.
High Aircraft Utilization
Another key element that has contributed to Spirit Airlines low cost is the fact that it flies its aircraft more often than most other airlines. Spirit has a commitment of trying to make as many flights as possible. In occupying the planes with passengers for as long as possible, Spirit can extend its fixed expenses, like fuel, plane maintenance, and wages for the flight attendants, across many flights. This tenure of use also makes it possible for the airline to make more returns on its investment in the aircraft through the sale of tickets and overall overhead costs than would otherwise be the case with other commercial carriers.
Standardized Fleet
Spirit has a fairly stable lineup: the company uses primarily Airbus A320 family airplanes. Standardization leads to uniformity in the fleets, lowering the cost of maintenance, training, and spare parts. When an airline uses several types of airplanes, the cost of managing different types of parts and teaching the crews to use different models is significantly higher. Thus, it is much simpler for Spirit to minimize these costs because the company operates with a single type of aircraft.
Direct Sales and Distribution
Spirit Airlines majorly focuses on its self-created sales, such as website and mobile applications that negate commissions on agents and third-party distributors. This direct sales approach proves to be less costly with regard to distribution than is often seen in the case of most airlines that heavily depend on middlemen. This also means that by asking their customers to book directly with them, Spirit has more leverage over the concerned booking process and has the capability of offering selective and appropriate discounts.
Ancillary Revenue
Spirit Incorporated derives another important stream of income from ancillary revenue. This includes sales of services that passengers can pay for, including seat preferences, carry-on and check-ins, and pre-boarding. Industry sources reveal that ancillary revenue may constitute a significant percentage of an airline’s total revenues at times. One can also explain Spirit’s reliance on generating what it calls ancillary revenue since its base fares are significantly low to help substantiate its pricing model.
Point-to-Point Network
Spirit Airlines is distinguished from the hub-and-spoke infrastructure and relies on a point-to-point network instead. In a point-to-point network, flights move through a linear system from one city to the next in a precise manner, unlike the hub-and-spoke network that will plunge through a central hub before shooting off to the next town and so on. This approach becomes advantageous as it eliminates some of the complications that characterize connections and hub operations. It also reduces the time that the aircraft are on the ground which also boosts the aircraft utilization at Spirit.
Cost Cutting Measures
One way SPIR targets containing costs include buying fuel and aircraft in large quantities, flying to smaller airports where costs, such as landing fees, are cheaper, and effectively planning for crew. Spirit’s skills in negotiating lower fuel and other operating necessities enhance its cost-effectiveness perspective.
Customer Demographics and Expectations
Spirit Airlines operates for a particular segment of the population that is conscious of the price and does not mind some ‘pains’ while traveling. The problem is that the existing market segment allows Spirit not to aim at the value creation stemming from the price competition rather than luxury services. This approach enables the airline to operate and accommodate the large VFR market still dominating the low-yield business while remaining low-cost.
Aggressive Pricing Strategy
Last but not least, Spirit Airlines uses unadulterated pricing strategies to woo the clients. This extends to what is commonly referred to as ‘unlocking’ fares that involve the promotion of fares such as fare reductions, flash fares, and other promotional gimmicks that are used to create demand and fill some of the seat capabilities. Thus, based on the research, it is always in Spirit’s ability to set fare changes and come up with better and cheaper fares all the time to ensure that the load factors are always high and the revenues from each flight are optimized.
Therefore, the no-frills service delivery, unbandaged pricing, high aircraft utilization, standardized fleet, direct selling, reliance on revenue from ancillary services, point-to-point network, cost efficiencies, customers’ demographic targeting, and intense fares are some of the factors that explain Spirit Airlines capability to offer cheaper fares. Thus, Spirit Airlines has an opportunity to remain a key Low-Cost Carrier while ensuring its organizations offer affordable travel for the targeted customers in the mentioned areas.
FAQ’s
Spirit Airlines provides an affordable and cheap which enhances your travel experience on a low budget.
Spirit Airlines flies within the United States and covers short international routes compared to other airlines.
According to a survey, Spirit Airlines is rated as a bad airline. Most people have rated it below average.
Spirit Airlines is criticized for its misleading fee system.
