bad press too. When people see gate agents getting beat up and fights on board, they automatically think of spirit.

 

This is the problem. Once ULCCs get to a certain scale, they actually have to absorb more costs. They have to pay more gate agents, rampers, maintenance, etc. Also, the worker groups have demanded more money. Spirit pilots make signfinicantly more than they did pre-Covid. They had serious trouble getting rampers and gate agents, after Covid and had to raise the prices there. When you fly once per day, you can get away with a peacemeal operation, but once you start getting lots of frequency, you have to build out infrastructure and fixed costs.

The biggest issue with Spirit, according to their SEC filings, is the lack of demand.

Q2: "However, demand for the peak summer travel period has been softer than expected, resulting in lower fare levels on the routes we serve. This summer we are comparing to a period of exceptionally strong domestic and near-field international demand in 2022, while at the same time seeing demand shift away from these regions towards long-haul international. Difficult weather and challenging Air Traffic Control initiatives are also creating a significant headwind to unit revenue.

These trends continued throughout July and we are assuming they will continue into the fall. However, once the international summer travel season ends and kids go back to school, we anticipate that demand will shift back towards domestic. This should mean a more normal pricing and demand environment for the peak holiday travel periods in the fourth quarter."

Q3: “Softer demand for our product and discounted fares in our markets led to a disappointing outcome for the third quarter 2023. We continue to see discounted fares for travel booked through the pre-Thanksgiving period. And, unfortunately, we have not seen the anticipated return to a normal demand and pricing environment for the peak holiday periods. Given these continued trends, we are evaluating our growth profile and our competitive position. We have already taken the first steps by modifying the cadence of our aircraft deliveries through the end of the decade and slowing our capacity growth in the near term. We continue to believe merging with JetBlue and creating a viable competitor to the Big Four US airlines is in the best interest of consumers, Team Members, and shareholders. We are prepared to make the necessary strategic shifts to enable Spirit to compete effectively in this new demand backdrop,”

 

I think your point is part of the problem. People are trying to make it like a legacy traveling experience. It’s not and it’s not intended to be. I don’t care about the bag of pretzels and a coke. I don’t care about the inflight entertainment. I don’t care about the wifi. I don’t care about the seat back charging. I usually don’t care what seat I get. I can read and measure a bag size limit. So for me a ULCC pricing structure is much more preferred.

To me the bigger problem is the psychology of the American ULCC experience right now. It feels like a gotcha on many of the fees. Instead it should start from the moment you purchase a ticket to feel like a game on how much you can save while still spending the money.

“Want a seat?”
”No.”
”BAM you just SAVED $25 each way! If you change your mind later no problem but for now that seat is FREE!….Check that bag instead of carrying it on and SAVE another $5!”

Flying for cheap should feel like winning a contest.

 

At the end of the day ULCC is a business model that’s based on filling as many seats as possible. Without fees, it has to be full. Why pay spirit fees when you can go to the big 4 for similar prices. In order to survive, they’re going to have to restructure their costs and they might have to rebrand. The spirit name is synonymous with passenger brawls and a cheap greyhound experience.

 

It’s not. I just described…oh forget it.

 

They also have to have high utilization per day. Having an asset in revenue service for 18 hours a day is 50% more than having one in service for 12 hours a day.

Few years ago Spirit “bought” their D0 numbers by lowering utilization and not driving turn and burn so hard. Before that they were maxing fleet utilization by selling unrealistic schedules and just taking the tardy’s. It is sort of unproven if Spirt can maintain a respectable D0, and have the utilization to maintain a profit.

The tacked on legs that Southwest has and that forces mostly AM or PM trips is what helps their utilization and profitability so much.

The big 3 can add a hub bank, or delete one and stretch the sits to cover the larger footprints of an available “travel day” and help poach the early/late travelers that are suppose to be utilization gravy profit.

 

They do? then why the aircraft sale/leaseback announcement the other day?

 

I believe they have roughly 1 B in cash on hand

 

I think they lost .5B this year alone. Not a ton of ramp left at the burn they are at. Id say they could last 2 years if they did nothing..maybe longer with the engine payments coming from Pratt...but long term profitability as a stand alone carrier will involve some major changes.

I dont think we are getting away from the alacarte, ancilliary rev model. We may offer different bundles and add more BFS in order to offere diffrent bundles. We have a strong presence in Florida and Vegas, which are two attractive markets and have grown a nationwide base structure to support it. I can see a doubling down on ultra low fares, ultra basic economy to vactation desitinations while also offereing compelling bundles, like a no-worries ticket - gets a big seat and checked bag or two carry ons, a tiered system like all the other airlines have..Wanna-get-away etc, etc.

I have no idea how they spin this PR-wise but it will require some advertising dollars and I am hoping the can leverage the current news buzz or the next large stock change to also capture positive PR, but I think that will help compete just as much as low fares will. A positive image helps more than people imagine.

 

Maybe there could be a company-sponsored contest for the most epic brawl on a Spirit flight or at a Spirit gate.

Top 10 submissions get a free bag check on a future Spirit flight!*

*void if you were added to the federal no-fly or banned from the airport list as a result of the brawl.