Spirit Airlines is an ultra-low-cost carrier that dominates the American airline industry by offering affordable travel to customers who are price-conscious. In 1964, the Clipper Trucking Company founded the Spirit Airlines and based it in Michigan (Elian & Cook, 2013). In 1974, the company’s name changed to Ground Air Transfer Inc.
Eventually, in 1983, the company began operating as a Charter One, offering their services through Michigan and Detroit. As Elian and Cook (2013) elucidates,the name Spirit Airlines was formally born in 1992. For the five years that followed, Spirit Airlines boomedrapidly throughout the US. In 1999 the Spirit Airlines moved to its current head office, Miramar, Florida.
Yes, Spirit Airlines has several core competencies that gives it competitive advantage over other airlines in the US. According to Elian and Cook (2013), Simplicity and lower base fare for their customers is the basis of Spirit’s business model. The ability to separate non-ticket revenues from the passengers’ tickets is the core of its brand. With these non-ticket revenues, the company collects more revenue that exceeds the total revenue (Elian & Cook, 2013). Spirit Airlines provides the non-ticket services by allowing their clients to purchase additional commodities that they might need.
Additionally, the above exceptional features ensure a steady and constant growth rate for the corporation. By offering the lowest fares in the industry, Spirit airlines builds its public image, making it famous. With the fame, the company reduces the costs it spends on advertising their brand.
Value chain analysis is essential in any business setting since it helps evaluate how various business operations marry with intended role of the company’s goods or services. Porter’s Value Chain model is essential to organizations as a management tool (Vattikoti & Razak, 2018). With the Porter’s model, a firm splits its operations and activities into small manageable portions. Because of value chain analysis, Vattikoti and Razak(2018) depicts that competitive advantage is realized. Competitive advantage is achieved when an organization understands its customers’ needs, tastes and preferences, then using the gauge to offer satisfactory products or services that meet or exceed the expectations of their existing (Vattikoti & Razak, 2018).
The primary value chain components within the Spirit Airlines includethe logistics that are involved in direct production and selling of products to the target customers. They include
The secondary components of value chain enlists all the actions that enhance cooperation and coordination of the primary activities within the firm.
Spirit Airlines specializes in low-cost competitive strategy. Althoughthe airline has achieved cost advantage through cost reduction, the firm needs to evaluate all its operations and relate them with the costs to make required modifications. Spirit Airlines dropped the most valued airline services to offer lower base prices (Elian & Cook, 2013). The low unity cost is achieved through strategies such as operating an up-to-date single fleet aircraft, an industrious workforce, decreasing advertising and distribution expenses.
As an Ultra-Low-Cost Carrier, Spirit Airlines specializes in providing very low and friendly costs to those customers whose main aim is to travel without the additional luxurious services. The American airlines on the other hand, focuseson the offering first class services to their customers (Williams,2019). The American Airlines prioritizes on their clients’ comfort, security, and remarkable experience. Its competitive advantage lies on service enhancement.
Elian, J., & Cook, G. N. (2013). Achieving a competitive advantage through ultra-lowCosts.Journal of Aviation/Aerospace Education & Research, 23(1), 23-32. https://doi.org/10.15394/jaaer.2013.1602
Vattikoti, K., & Razak, A. (2018). Critical evaluation of value chain analysis for assessing competitive advantage-a study on select companies ofe-tailing industry. Academy of Strategic Management Journal, 17(6), 1-14. Retrieved May 21, 2021, from https://www.abacademies.org/articles/Critical-evaluation-of-value-chain-analysis-for-assessing-competitive-advantage-1939-6104-17-6-286.pdf
Williams, M. (2019).American Airlines flies into the low-cost carrier market. https://doi.org/10.13140/RG.2.2.29866.26566