Spirit Airlines 2012 Annual Report Download - page 6

DC 20549 or may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a Web site at http://www.sec.gov that contains reports, proxy
statements and other information regarding issuers that file electronically with the SEC. We also post on the Investor Relations page of our Web site, www.spirit.com , a link
to our filings with the SEC, our Corporate Governance Guidelines and Code of Business Conduct and Ethics, which applies to all directors and all our employees, and the
charters of our Audit, Compensation, Finance and Nominating and Corporate Governance committees. Our filings with the SEC are posted as soon as reasonably practical
after they are filed electronically with the SEC. Please note that information contained on our Web site is not incorporated by reference in, or considered to be a part of, this
report. You can also obtain copies of these documents free of charge by writing to us at: Corporate Secretary, Spirit Airlines, Inc., 2800 Executive Way, Miramar, Florida
33025, or emailing us at: Corporate.Secreta[email protected] .
Our Business Model
Our ULCC business model provides customers very low base fares with a range of optional services, allowing customers the freedom to choose only the extras they
value. The success of our model is driven by our low cost structure, which permits us to offer very low base fares while maintaining one of the highest profit margins in the
industry.
We are focused on price-
sensitive travelers who pay for their own travel, and our business model is designed to deliver what we believe our customers want: low fares.
We aggressively use low fares to stimulate air travel demand in order to increase passenger volume, load factors and non-ticket revenue on the flights we operate. Higher
passenger volumes and load factors help us sell more ancillary products and services, which in turn allows us to reduce the base fare we offer even further, stimulating
additional demand. We strive to be recognized by our customers and potential customers as the low-fare leader in the markets we serve.
We compete based on total price. We believe other airlines have used an all-inclusive price concept to effectively 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 when we allow our customers to know the total
price of their travel by breaking out the cost of additional, optional products or services. Before they pay, our customers are easily able to compare the total cost of flying
with us versus flying with another airline.
We allow our customers to see all available options and their prices prior to purchasing a ticket, and this full transparency illustrates that our total prices are lower, on
average, than our competitors, even when options are included.
Our Strengths
We believe we compete successfully in the airline industry by leveraging 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 among the highest operating margins in our industry, and support continued
growth. Our operating costs per available seat mile (CASM) of 10.09 cent s in 2012 , are significantly lower than those 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 unit operating costs in large part due to:
5
•
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;
• reduced sales, marketing and distribution costs through direct-to-
consumer marketing;
•
efficient flight scheduling, including minimal ground times between flights; and
• a company-
wide business culture that is keenly focused on driving costs lower.