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Spirit Airlines is a business paradox: the airline has the highest percentage of complaints per 10,000 passengers, but also boasts the best profit margins in the industry. How does an airline that consumers claim to hate continue to outperform competitors on profit margin and revenue growth?\u00a0It’s because Spirit\u00a0has a significant\u00a0competitive advantage (low-cost tickets) due to the alignment between the business model and the operating model.<\/p>\n
Business Model<\/strong>:<\/p>\n Spirit is an ultra-low cost airline carrier, targeting price sensitive leisure travelers who pay for their own travel. This leisure segment of the market is underserved, as the major U.S carriers focus on business travelers who care most about flight schedule and service.<\/p>\n Spirit believes that passengers should only pay for what they want.<\/strong><\/p>\n Spirit Airlines competes by offering low \u201cBare Fares,\u201d which is, in their own words, a seat and \u201cgas money to get you from A to B.\u201d The Bare Fare does not include items typically included in an airline ticket, such as beverages on the flight, carry-on baggage, and a reserved seat. These additional services are optional and come with a price tag of their own. Even with the add-ons, Spirit reports that its total all-in fares for consumers are 40% less than other major airlines<\/strong>.<\/p>\n