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Spirit Grows Ancillary Rev; To Offer More $9 Fares  
User currently offlineLAXintl From United States of America, joined May 2000, 25362 posts, RR: 49
Posted (5 years 4 months 6 days 15 hours ago) and read 3094 times:

Following the Ryanair mold further.

Good for them if it works. They managed a $11mil profit in Q4.

Quote:
Spirit executives believe it is possible for an airline to obtain as much as 80% of its revenue from sources other than airline ticket sales, Chief Marketing Officer Barry Biffle said May 12.

Biffle, who made the remark in a speech at the Airline Sales Channel Forum and A La Carte Pricing conference in Miami, said that he was talking about a “theoretical” maximum.
Spirit now tops 25%, is “pushing” 30%, and believes 40% is “within sight.”

Spirit is one of the U.S. industry leaders in charging for checked bags, advance seat assignments, all snacks and drinks and upgrades to roomier coach seats. It also makes money from its cut of hotel, car rental and cruise bookings and travel insurance sales, as well as a branded credit card.

Biffle also declared: “We’re not going to stop until $9 is our most popular fare.”

Full story (subscription required)
http://www.aviationweek.com/publicat...quo%3B+Of+40%25+Non-Ticket+Revenue


From the desert to the sea, to all of Southern California
16 replies: All unread, jump to last
 
User currently offlineEghansen From , joined Dec 1969, posts, RR:
Reply 1, posted (5 years 4 months 6 days 13 hours ago) and read 2998 times:



Quoting LAXintl (Thread starter):
Following the Ryanair mold further.

Seems like they more resemble one of the European holiday charter airlines such as Transavia or Thomas Cook. Ryanair's route map much more closely resembles that of Southwest than Spirit.


User currently offlineSflaflight From United States of America, joined Nov 2005, 1183 posts, RR: 1
Reply 2, posted (5 years 4 months 6 days 11 hours ago) and read 2914 times:



Quoting Eghansen (Reply 1):
Ryanair's route map much more closely resembles that of Southwest than Spirit.


Um...no! Ryanair's route map does not resemble WN at all. WN serves major metropolitain areas in the core. Ryanair serves mostly secondary/terciary cities. U2 is much closer to WN than FR!

but I don't think we are talking about routes, more along the lines of service and business model. NK is definitely more like FR, an ULCC, in terms of business. Southwest's business model is more along the lines of U2.


User currently offlineLAXintl From United States of America, joined May 2000, 25362 posts, RR: 49
Reply 3, posted (5 years 4 months 6 days 11 hours ago) and read 2908 times:



Quoting Sflaflight (Reply 2):
but I don't think we are talking about routes, more along the lines of service and business model

 checkmark  Indeed business model. Not route map of all things  Confused



From the desert to the sea, to all of Southern California
User currently offlineEghansen From , joined Dec 1969, posts, RR:
Reply 4, posted (5 years 4 months 5 days 17 hours ago) and read 2700 times:



Quoting Sflaflight (Reply 2):
NK is definitely more like FR, an ULCC, in terms of business. Southwest's business model is more along the lines of U2.

Spirit Airlines doesn't resemble either Ryanair, Easyjet or Southwest. It has only 28 aircraft vs 184, 172 and 540 for the other airlines respectively. Its hub is in Ft. Lauderdale, primarily a tourist and cruise ship destination. It serves such business centers as Atlantic City, Myrtle Beach, Punta Cana and St. Maarten.

It is primarily a leisure holiday airline like Thomas Cook, Transavia, Thomson, etc.


User currently offlineFlyingcat From United States of America, joined May 2007, 541 posts, RR: 0
Reply 5, posted (5 years 4 months 5 days 16 hours ago) and read 2662 times:

I do not have an aviation week sub so unless Mr. Biffle talked more about the $9 fare it seems the title is incorrect. The quote is that they would not stop until $9 fare is the most popular not the most purchased nor most available. While all the ancillary revenue is good and spirit clearly is the pioneer in the US. I have doubts that they would ever seek to push lower fares when they can easily fill their planes as is.

Bottom line Barry Biffle is marketing not revenue management so I would take his word like that of a showman.


User currently offlineItalianFlyer From United States of America, joined Nov 2007, 1099 posts, RR: 2
Reply 6, posted (5 years 4 months 5 days 16 hours ago) and read 2648 times:

Meanwhile, their ALPA chapter today announced a strike authorization vote of 95% in favor....hmmmm.

User currently offlineMariner From New Zealand, joined Nov 2001, 25248 posts, RR: 85
Reply 7, posted (5 years 4 months 5 days 16 hours ago) and read 2628 times:
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Quoting Flyingcat (Reply 5):
While all the ancillary revenue is good and spirit clearly is the pioneer in the US.

I would have thought the pioneer is Allegiant.

It's tough to know quite what the article claims because it's subscription and I won't pay, but back in 2007 Allegiant had already reached the $25 per pax figure.

http://industry.bnet.com/travel/1000...ncillary-revenue-is-the-new-black/

bnet: "Here in the United States, Allegiant Air has been the king of the castle. In fact, by the last quarter of 2007, Allegiant was earning nearly $25 in ancillary revenue for every passenger it flew. That’s nearly a fifth of their operating revenue."

In 1Q 2009, it looks even better - average fare was down over 2008, but ancillary was up:

http://www.reuters.com/article/press.../idUS68333+19-Apr-2009+PRN20090419

"Average fare - scheduled service: (2009) $74.52 (2008) $87.00 change (14.3)%
Average fare - ancillary: (2009) $34.14 (2008) $25.75 change 32.6% %"


mariner



aeternum nauta
User currently offlineLAXintl From United States of America, joined May 2000, 25362 posts, RR: 49
Reply 8, posted (5 years 4 months 5 days 14 hours ago) and read 2575 times:

According to the article Spirits currently makes nearly $30 per passenger in ancillary charges representing a bit above 25% of total passenger revenues.

Quote:
Biffle said Spirit has tripled its non-ticket revenue per passenger since 2006 to about $30.

The gist of the message is basically that the airline sees ancillary revenues growing and becoming an ever large percentage of total revenue, trading places with and allowing the actual ticket price to continue to decline to as low as "one penny".

Last year Spirit carried about 7 million passengers, of which about 500,000 tickets we sold for under $10.

Basically its very much along the line of what MOL at Ryanair has said, where he could one day envisage the ticket being basically free, but earning money off a whole host other services or charges.



From the desert to the sea, to all of Southern California
User currently offlineEghansen From , joined Dec 1969, posts, RR:
Reply 9, posted (5 years 4 months 5 days 12 hours ago) and read 2516 times:



Quoting Mariner (Reply 7):
In 1Q 2009, it looks even better - average fare was down over 2008, but ancillary was up

I know this is a stereotype, but people flying to Las Vegas on holiday buy more cocktails than average. I know it because I have seen it happen. They also smoke more, but that is no longer allowed on airplanes. Maybe that is the reason the buy more cocktails, come to think of it.


User currently offlineMariner From New Zealand, joined Nov 2001, 25248 posts, RR: 85
Reply 10, posted (5 years 4 months 5 days 12 hours ago) and read 2504 times:
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Quoting Eghansen (Reply 9):
Maybe that is the reason the buy more cocktails, come to think of it.

I agree. I used to do it myself in the days when I was drinking.

I'm not sure what that says about the pax flying on Allegiant to Phoenix-Mesa or Punta Gorda.  Smile

mariner



aeternum nauta
User currently offlineSflaflight From United States of America, joined Nov 2005, 1183 posts, RR: 1
Reply 11, posted (5 years 4 months 5 days 12 hours ago) and read 2488 times:



Quoting Eghansen (Reply 4):
Spirit Airlines doesn't resemble either Ryanair, Easyjet or Southwest

Yes it does - in terms of business model. We were talking about business model - ancillary revenue is business model. No one was talking about fleet, routes, employees. Obviously with respect to the latter points Spirit isn't Ryanair, but Spirit is very much like Ryanair when it comes to running an airline. The charge for everything, put advertising all over the interior of the plane and come out with ridiculuosly silly sale gimmicks. As my hometown airline, I used to love them when they were run like a low cost carrier, now they are run like an ULCC. I buy a 69.00 ticket, pay to check a bag, pay for a seat, pay for my soft drink, food and blanket.

Quoting Eghansen (Reply 4):
It serves such business centers as Atlantic City, Myrtle Beach, Punta Cana and St. Maarten.

Again, we weren't talking destinations, but those cities are far from business centers. Those are resort centers.


User currently offlineEghansen From , joined Dec 1969, posts, RR:
Reply 12, posted (5 years 4 months 5 days 11 hours ago) and read 2473 times:



Quoting LAXintl (Reply 8):
of which about 500,000 tickets we sold for under $10.

That is a bunch of bogus crap put out by the airlines to screw passengers.

What they do is sell you a package deal for Vegas (or wherever) for $600 and then claim that the hotel cost $595 and the airfare was $5.00. Then if the flight is canceled and you want a refund on the air portion, they say "sorry, but you only get $2.50 back because you had a cheap fare."

The same thing happened to me twice when I booked using United Vacations with airfare, hotels and transfers. I flew from LAX-SIN-DPS-SIN-BKK-LAX and the ticket I had did not show a fare. It showed PROMO in the fare code. This was in the days when we had paper tickets.

The cruise ship companies do the same thing by offering a cruise with "free airfare." You know the airfare is not actually free, but you end up with no options whatsoever if the flight is canceled or you miss your connection. You have to wait for the next flight on the same airline.

Quoting Sflaflight (Reply 11):
No one was talking about fleet, routes, employees.

Advertising on a tray table is not a business model. When seeking financing for an airline, fleet, employees and routes are the business model. When a startup looks for financing, the pertinent questions are all about "What aircraft will you be flying?", "What cities/markets will you be flying to?", "Will you be catering to the leisure or business traveler, or both?"

If you go to investment bankers and try to get money talking about your tray table advertising you will be shown the door until you can come up with something better.


User currently offlineLAXintl From United States of America, joined May 2000, 25362 posts, RR: 49
Reply 13, posted (5 years 4 months 5 days 11 hours ago) and read 2460 times:



Quoting Eghansen (Reply 12):
That is a bunch of bogus crap put out by the airlines to screw passengers.

No Spirit has something called the $9 Club where weekly fares are truly as low as a penny.

I know people back East that have indeed flown Spirit for $1 between LGA and Florida!

So when they say 500,000 people flew on such fares in 2008, I have no reason to doubt such.



From the desert to the sea, to all of Southern California
User currently offlineAirNZ From , joined Dec 1969, posts, RR:
Reply 14, posted (5 years 4 months 4 days 20 hours ago) and read 2331 times:



Quoting Eghansen (Reply 4):
Spirit Airlines
doesn't resemble either Ryanair, Easyjet or Southwest. It has only 28 aircraft vs 184, 172 and 540 for the other airlines respectively. Its hub is in Ft. Lauderdale, primarily a tourist and cruise ship
destination. It serves such business centers as Atlantic City, Myrtle Beach, Punta Cana and St. Maarten.

As the thread is about Spirit Airlines, could someone explain to me the seemingly repeated need to compare it with Ryanair, Easyjet, or Thomas Cook???? Hmmm! since when are Atlantic City, Myrtle Beach, Punta Cana and St. Maarten business centres? As where it's hub is, they are purely tourist destinations.


User currently offlineExFATboy From United States of America, joined Jul 2003, 2974 posts, RR: 8
Reply 15, posted (5 years 4 months 4 days 19 hours ago) and read 2308 times:



Quoting AirNZ (Reply 14):
As the thread is about Spirit Airlines, could someone explain to me the seemingly repeated need to compare it with Ryanair, Easyjet, or Thomas Cook????

Spirit is compared to Ryanair and Easyjet because it was the first US airline to start charging for (or at least get a lot of publicity around charging for) non-alcoholic beverages, snacks, assigned seating, booking on the web site (I think?), etc., for the emphasis on in-flight sales as a major component of their revenue stream, and for being the first US airline to make ultra-low fares a major part of their advertising program. Mainstream US non-network carriers - Southwest, JetBlue, AirTran, Frontier - provide snacks and non-alcoholic beverages for free and do not charge "convenience fees" for web site use, etc.

Strangely, Spirit also gets criticized for policies that Allegiant also has (and in some cases pioneered), yet Allegiant has recently become the darling of the business media, after flying below the radar for so long.

Bottom line is that, at least as far as I can tell, Spirit gets compared to Ryanair for the cheeky adverts ("MILF", etc), super-low loss-leader fares, and that their CEO is just as brash and big-mouthed as O'Leary is.


User currently offlineEghansen From , joined Dec 1969, posts, RR:
Reply 16, posted (5 years 4 months 4 days 14 hours ago) and read 2206 times:



Quoting AirNZ (Reply 14):
As the thread is about Spirit Airlines, could someone explain to me the seemingly repeated need to compare it with Ryanair, Easyjet, or Thomas Cook????

Because of this sentence in the initial post.

"Following the Ryanair mold further. "

Quoting ExFATboy (Reply 15):
Spirit is compared to Ryanair and Easyjet because it was the first US airline to start charging for (or at least get a lot of publicity around charging for) non-alcoholic beverages, snacks, assigned seating, booking on the web site (I think?), etc., for the emphasis on in-flight sales as a major component of their revenue stream, and for being the first US airline to make ultra-low fares a major part of their advertising program.

Except for the part about the web site, all of those firsts were definitely begun by People Express back in the 1980s. They were the first airline to charge for checked baggage, food and drinks. They were also a much larger airline than Spirit with 81 aircraft.


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