Spirit Airlines 2011 Annual Report Download - page 13

Download and view the complete annual report

Please find page 13 of the 2011 Spirit Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

fares were reduced by up to $40 allowing customers to save more by choosing not to bring extra luggage on board.
Competing Based on Total Price
Our goal is to compete based on total price. We believe that other airlines have used an all-inclusive price concept to raise total prices to
consumers, rather than lowering fares by unbundling each product or service. For example, carriers that tout “free bags” have included the cost
of checking bags in the total ticket price, not allowing passengers to see how much they would save if they did not check luggage. We believe
that we and our customers benefit from allowing customers to know the total price of their travel by breaking out the cost of additional, optional
products or services. Customers are then able to compare the total cost of flying with us versus flying another airline.
We recently modified our online booking process to allow our customers to see all available options and their prices prior to purchasing a
ticket, and have initiated a campaign that illustrates that our total prices are lower, on average, than our competitors, even when options are
included.
Route Network
As of December 31, 2011, our route network included 98 markets served by 48 airports throughout North America, the Caribbean and
Latin America. The majority of our routes operate to or from our South Florida gateway at Fort Lauderdale-Hollywood International Airport, or
FLL Airport. As measured by available seat miles, or capacity, for 2011 we had approximately 54% of our capacity operating to or from FLL
Airport providing service to the domestic U.S., the Caribbean and Latin America. For the same period, six other niche domestic markets made up
the majority of the balance, including Detroit, Michigan, Las Vegas, Nevada, Atlantic City, New Jersey, Chicago, Illinois, Orlando, Florida and
Myrtle Beach, South Carolina. These markets help provide seasonal balance to our Caribbean and Latin American routes.
Below is a route map of our current network:
Our South Florida gateway is a key component of our route network and our ULCC strategy. We selected FLL Airport as our base in 2004
due to the strategic and financial benefits it provided, including the geographic proximity to our current and planned flight routes serving the
Caribbean and Latin America. FLL Airport is also convenient to a large local market of price-sensitive South Florida residents who are of
Caribbean and Latin American descent seeking affordable travel to destinations in those targeted markets. FLL Airport offers us significantly
lower operating costs than Miami International Airport and is more centrally located in the broader South Florida market, which spans Palm
Beach, Broward and Dade counties. As of December 31, 2011, we were the largest domestic and international carrier at FLL Airport, offering
more nonstop routes than any other carrier, carrying more passengers than any other carrier and operating out of more gates than any other
carrier.
10