The Future of Spirit Airlines

Introduction

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.

  1. Does Spirit Airlines have any core competencies, and if so, what are they?

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.

  1. What are the primary and secondary components of its value chain?

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

  • Pre-sale and post-sale services. The overall services offered by Spirit Airlines will enhance brand loyalty from the potential and existing customers (Williams, 2019). It is also important that the airline takes precautionary measures to uphold the public image of the brand.
  • Inward bound logistics. Vattikoti and Razak (2018) elaborates on how Spirit Airlines should concentrate on every pit of conversion of raw materials to finished goods. Additionally, strong relationships with suppliers is key to the production process.
  • Sales and Marketing. Product differentiation and production of quality products will convince the potential and existing customers that the Airline will only offer better product and services than its contenders (Williams, 2019). However, this alone is not as valuable until sales and marketing is incorporated. Brand image can be improved throughproper pricing, promotion, and advertising.

The secondary components of value chain enlists all the actions that enhance cooperation and coordination of the primary activities within the firm.

  • Technological advancements. Spirit Airlines should strive to keep abreast of all the technological developments arising in the contemporary world(Williams, 2019). The company should adopt the changes in all levels of operation, including the research and development department.
  • Human Resource management.As Williams (2019) states, the human resource management analysis can be achieved through proper examination of all HR departments including selection and acquisition of personnel, recruitment,training and, rewarding performance.
  • Effective management of firm’s infrastructure. This will give the Spirit Airlines an opportunity to uphold value for the entire value chain as well as sustaining their competitive advantage.
  1. Which one of the five generic competitive strategies most closelyapproximates the competitive approach that Spirit Airlines is employing?

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.

  1. What chief differences do you see between the strategy of Spirit Airlines, and the strategy being employed at American Airlines?

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.

 

 

References

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

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