Ultra low-cost carrier (ULCC) Spirit Airlines operates more than
450 daily flights between major US cities and popular vacation
spots in South Florida, the Caribbean, and Latin America, serving
nearly 60 destinations. It operates an all Airbus fleet of nearly
95 single-aisle aircraft, including A319s, A320s, and A321s. Spirit
capitalizes on an ancillary service model, charging separately for
baggage, advance seat selection, and other travel-related upgrades.
In addition to scheduled service, the company partners with
third-party vendors to offer a slate of vacation packages via its
Spirit's operations are divided into passenger revenues and
non-ticket revenues. Passenger revenues (52% of net sales) are
comprised of base fares that customers pay for air travel.
Non-ticket revenues (48%) are generated from air travel-related
charges for baggage, passenger usage fees (PUF) for bookings,
advance seat selections, itinerary changes, hotel and rental car
travel packages, and loyalty programs such as its FREE SPIRIT
affinity credit card program and $9 Fare Club.
The company's route network includes 200 markets served by 59
airports throughout North America, Central America, South America,
and the Caribbean. Revenue generated from the US accounts for more
than 90% of Spirit's revenue.
Spirit Airlines has its executive offices and headquarters
located in a leased facility in Florida. It has additional
maintenance operations in leased facilities in Detroit; Chicago;
Atlantic City, New Jersey; Dallas; Houston; and Las Vegas,
Sales and Marketing
Spirit Airlines sells through its website, an outsourced call
center, and third-party travel agents. Its spirit.com site accounts
for about two-thirds of sales.
Spirit has enjoyed uncharted growth over the years. Revenues
jumped 8% from $2.14 billion in 2015 to $2.32 billion in 2016, a
historic milestone for the company. The spike in revenue in 2016
was driven by a 3% increase in passenger revenue. Non-ticket
revenue also climbed 15% due to a 20% increase in traffic and an
increase in baggage revenue per passenger flight segment.
Profits, however, fell 17% from $317 million in 2015 to $265
million in 2016 due a 10% decrease in its average yield that
resulted from continued competitive pressures from major US
carriers aggressively discounting fare prices. In addition, its
cash flow from operations remained static, hovering around the $473
million mark for both 2015 and 2016.
To maintain its impressive growth trajectory, Spirit has
expanded its fleet. The ultra-low cost carrier ended 2016 with 95
aircraft in its fleet, up from just 45 at the end of 2012. It plans
to increase its capacity by another 19% in 2017, growing its fleet
to 107 planes by the year-end.
Spirit announced in 2017 it is expanding in midsize cities that
have sufficient demand but less competition than big hub markets.
Among Spirit's new year-round routes are flights from the important
growth market of New Orleans to Baltimore, Cleveland, and Orlando.
Like most carriers within its industry, Spirit's top issue is
controlling costs in order to sustain a profit from its low
The company has also leveraged an aggressive unbundling strategy
to stimulate passenger demand and revenues. Unbundling allows
passengers to pay separately for products and services that they
want to use. Charging for such extras as onboard beverages and
snacks enables Spirit to offset its low ticket prices as well as
maintain its competitive market presence.