Spirit Airline Strategic Planning

Executive of the Sprit Airline

Spirit Airlines is a highly low cost carrier. It gives the clients many options of customizing their base tickets amounts. The company has agent print-outs known as the boarding pass. The boarding pass is used to check the input versus the doing in the online kiosk. The system checks bags and progressively increases charges for overweight bags.  By 2007, the Spirit started charging an amount of $3 for drinks. The charges increased to $5 in 2011 for passengers boarding passes printed at the check-in. According to these company, any bags that can exactly fit under the seats, are not charged. Any big bags that cause the overwhelming condition to the operators are the ones that are charged. The company ensures that the luggage does not exceed 50 pounds, and the bags are loaded up to $25. The company started in the US as a carrier to temporary to increase the passenger baggage fees (Eden, 1996).  In the states, the bag fees began with a minimal fee of $2 to attract fewer bags to the airline during traveling.  The aim of the company in discouraging passengers from carrying huge bags have resulted in another open business.

The company attains a higher competitive advantage over the higher-cost carriers. Its low prices in the market make it maintain its customers. Unlike some other companies such as the Delta Airline, US Airways and many other means of transport enterprises in the US, the stripe line has the least charges thus making many people prefer to use it. The company is also winning the competitive ability by ensuring that its bankruptcy is protected (White, 2001).  The company was recorded to be among the businesses in the US airlines that protected its bankruptcy. By so doing, it established a strong foundation in the market as compared to the other airline which was declared bankrupt in the year 2012

The attractiveness of the Airstrip industry makes customers like it. The leisure travels cost which depends on the service provided by the airstrip increases when the service given by the airline industry are active. The most significant factor that makes the airstrip gain more customers is its effectiveness.

BCG Analysis

The BCG Matrix graphically shows differences amongst Spirit Airlines’ passenger revenues and profits and non-ticket income and profits about market share position and industry growth rate. Passenger revenue is obtained from the base company’s ticket sales.  Miscellaneous income is known ancillary fees generate non-ticket profits, including but not limited to checked baggage, advance seat selection, in-flight sales, etc. Spirit Airlines’ passenger revenues and profits division fall into 1st Quadrant, the Upper “Question Mark.” Units positioned in 1st Quadrant have high cash needs and small relative market share position, although they compete in a high-growth industry. Divisions in this Quadrant require close monitoring by internal controls and are often considered “problem children.” Spirit Airlines’ passenger revenues and profits section maintain a relatively small market share position, as evidenced by the firm’s 2% market share. Also, Spirit Airlines only carries 1% of U.S. passengers. At the heart Spirit Airlines’ business model is offering the lowest base fare to its customers.

Therefore, the passenger revenues and profits division will never become a Star or Cash Cow without dramatic strategy implementation. Attractive plans for departments in the Question Mark Quadrant are market penetration, market development, product development and divestiture. Spirit Airlines has made a significant investment to double the size of its fleet by 2020, representative of a current market growth strategy. As a result, this action could allow the passenger revenues and profits division to move from a Question Mark to Star, and ultimately Cash Cows if the airline continues to operate profitability. Spirit Airlines’ non-ticket income and benefits section fall into Quadrant III, the Upper “Cash Cow”. Divisions positioned in 3rd Quadrant of the BCG Matrix compete in a low-growth industry and have a high relative market share position. The non-ticket revenues and profits division generates cash more than its operating needs. It is the non-ticket income and benefits department that allows Spirit Airlines to maintain its competitive position in the marketplace, of offering the lowest base fare ticket value. As long as the non-ticket section’s revenues and profits continue to perform at this highly profitable level, Spirit Airlines will be able to maintain its strong position in the future. Although Spirit Airlines is innovative about its competition in using this division to generate significant portions of total revenue, this is a mature market because the firm has actively pursued this strategy and has been profitable (Eden, 1994). Attractive plans for divisions in the Cash Cow Quadrant include product development, diversification, retrenchment, and divestiture. Regarding Spirit Airlines non-ticket division, product development and diversification are the most advantageous strategies to pursue. On a BCG Matrix, the size of the divisional circles illustrates overall sales volume.

QSPM Analysis