Originally Posted by
labbats
I hope everyone at Spirit the best but be aware that almost all of your growth is a result of a weak American Airlines.
When looking at the largest route growth, only 4 routes were dominated by AA prior to our entry:
DFW-MYR
DFW-ORD
DFW-LGA
DFW-BOS
The rest of them are shared between a couple carriers (AA, UA, and WN in Chicago, for instance) or dominated by another carrier, often Southwest. Is Southwest 'weak' now, too? Our management certainly doesn't think so - they regard Southwest as our main competition, and jetBlue as secondary (if you could check a bag, watch TV or surf the internet, recline your seat, get a drink, and do it all for the same prices as Spirit, would you choose Spirit? Nope!). AA is in another league! As a general rule, we really do expand a market, so we're really taking travelers that AA (or anyone else) wouldn't have carried anyway - they'd lose $ on them. Greyhound and family minivans are our competition! Admittedly, we do probably poach a couple passengers from legacies and Southwest, but not many. Look at the article:
Portland-Las Vegas was dominated by Southwest. . . . Southwest . . . controlled 48.4% of the market. . . . In the 4th quarter of 2011, . . . the market had grown over 32.3% . . . Spirit held 16.7% of the market . . . Southwest still controlled 40.5% of the market.
See? Southwest had 48% of the route. The market grew 32%. Now they have 40.5%. Southwest actually has MORE passengers now than they did before (over 5% more), but they're charging the customer less, so, they probably lost a little bit of $, but they'd lose more to get in some stupid fare war with Spirit.
Or DFW-ORD. AA's bread and butter. They had 67.4% of the market, now they have 63.4%. The market grew 21.9%, and now AA has 63.4% of the market. AA yielded 27.9 cents on the market, now they yield 24.6. So, AA's yield dropped 13.4%, and their passengers went up 9.88%. A net loss of 3.5% for AA, but we're yielding 10.7, vs. AA's 24.6 - we're not carrying the 'cognac and breadstick' crowd here, ya' know? AA's frequent fliers get access to priority on the (soon to be) largest airline in the world, hundreds of destinations, priority on code-share alliances that cover the globe, lounges, upgrades to business or first, a dedicated phone line, priority boarding, free checked bags etc. Ours - they get bombarded with advertisements in the e-mail, and offered some deals on Spirit flights - but still have to pay for a bottle of water onboard.
When you look at Spirit's costs, they're MUCH lower than every other carrier. We have our weakness - our customer service. Our management is looking to improve this, but, it will take time. We're never going to be a Skytrax 5 star airline, no matter how much we focus on our customers. AA's got a lot of things to worry about. Spirit poaching their passengers or their profits doesn't seem to be one of them right now.
As for the 'Spirit effect' - is it real? It is. Does it matter to anyone who can make a difference?
The DOT still thinks Southwest walks on water and deserves slots in any merger scenario (EWR slots, LGA slots, DCA slots, more probably on their way - Spirit sold our DCA slots to Southwest), and passengers still think 'Save $ = fly Southwest'. Good for Southwest - great marketing and the effects of Herb's leadership are still apparent.
We'll just continue filling our airplanes with passengers who are too cheap to fly anyone else and focus on keeping our costs low and our profits high.
Just reading this makes me feel like I'm drunk on Spirit flavored Kool-Aid!
