The Spirit Of Spirit Airlines

791 Words4 Pages
Spirit Airlines has been the self-proclaimed ultra-low budget airline, and thus its revenue flow is roughly split between passenger and non-ticket income. (Spirit Airlines Inc., 2016) With the airlines growing fleet they have also expanded the Available Seat Miles (ASMs) by 20% from the past year. The airline has been able to maintain high margins through this unique business style, for the first quarter 2016 Spirit Airlines posted a 21.3% pre-tax profit margin. However this has not stopped Spirit’s stock prices from dropping from an all-time high of $84 to the current $42 in the past two years. (Yahoo Finance, 2016) Spirit plans to continue to grow its fleet and provide service to an expanding network of airports utilizing its signature…show more content…
Charging customers for drinks, carry-on bags, even a printed boarding pass has become half of Spirit’s operating revenue. As you can see from the data below the airlines Passenger ticket revenue has remained relatively flat over from the previous year, however the Non-ticket revenue has increased by 20.8% (Spirit Airlines Inc., 2016) Operating revenues: (thousands) Passenger $ 272,626 $ 273,466 (0.3 ) Non-ticket 265,517 219,889 20.8 Total operating revenues 538,143 493,355 9.1 This data is showing for the first quarter of 2016 compared to the first quarter 2015 that the total operating revenue growth is driven by the Non-ticket income growth. This income strategy has been highly successful for Spirit as they have been able to keep up with rising costs in fuel and salaries. Spirit Airlines also heavily focuses on saving expenses in multiple areas. The company has a modest headquarters and cuts back on extra luxuries in-flight. One of the intended side effects of the high rates for checked luggage is that passengers have less baggage and the aircraft will be lighter overall. Less luggage, less food and drink, and even a lack of WiFi onboard cuts down on the amount of weight the airline must carry; these savings are translated into
Open Document