Spirit Airlines 2011 Annual Report Download - page 8

Our Strengths
We believe we compete successfully in the airline industry by exploiting the following demonstrated business strengths:
Ultra Low-Cost Structure . Our unit operating costs are among the lowest of all airlines operating in the Americas. We believe this cost
advantage helps protect our market position and enables us to offer some of the lowest base fares in our markets, sustain operating margins and
support continued growth. Our operating costs per available seat mile, or CASM, of 9.91 cents in 2011, are significantly lower than that of the
major domestic network carriers, American Airlines, Delta Air Lines, United Air Lines and US Airways, and among the lowest of the domestic
low-cost carriers, including JetBlue Airways and Southwest Airlines. We achieve these low operating costs in large part due to:
Innovative Revenue Generation . We execute our innovative, unbundled pricing strategy to produce significant non-ticket revenue
generation, which allows us to stimulate passenger demand for our product by lowering base fares and enabling passengers to identify, select and
pay for the products and services they want to use. Our unbundled strategy has enabled us to grow average non-ticket revenue per passenger
flight segment from approximately $5 in 2006 to $45 in 2011 by:
Resilient Business Model and Customer Base
. By focusing on price sensitive travelers, we have maintained relatively stable unit revenue
and profitability during volatile economic periods because we are not highly dependent on premium-fare business traffic, which typically
demands a higher cost structure. For example, in 2009, when premium-fare business traffic declined due to the economic recession, our
operating revenue per available seat mile, or RASM, declined 1.9% compared to an average U.S. airline industry decline of over 9%. During this
same period of volatile fuel prices and global economic recession, we also were able to achieve the highest operating income margin in our
history. Based on this performance, we believe our growing customer base is more resilient than the customer bases of most other airlines
because our low fares and unbundled service offering appeal to price-sensitive passengers.
Well Positioned for Growth . We are the largest operator of international flights flying out of Fort Lauderdale–Hollywood International
•
high aircraft utilization;
• high-
density seating configurations on our aircraft;
•
our simple operations;
• no hub-and-
spoke inefficiencies ;
•
highly productive workforce;
•
opportunistic outsourcing of operating functions;
• operating a modern single fleet type of Airbus A320-family aircraft, with associated lower maintenance costs and common flight crews
across the fleet;
• minimizing sales, marketing and distribution costs through direct-to-
consumer marketing;
•
efficient flight scheduling, including minimal ground times between flights; and
• creating a company-
wide business culture that is keenly focused on driving costs lower.
• charging for checked and carry-
on baggage;
• passing through all distribution-
related expenses;
•
charging for premium seats and advance seat selection;
•
enforcing ticketing policies, including change fees;
• generating subscription fees from our $9 Fare Club ultra low-
fare subscription service;
• deriving brand-
based fees from proprietary services, such as our FREE SPIRIT affinity credit card program;
•
selling itinerary attachments, such as hotel and car rental reservations and airport parking, through our website; and
• selling in-
flight products and onboard advertising.