Spirit Airlines Details Major Capacity Increases For Rest Of 2021

American ultra-low-cost carrier (ULCC) Spirit Airlines has detailed capacity plans for the rest of the year. Heading into…

Spirit Airlines Details Major Capacity Increases For Rest Of 2021

American ultra-low-cost carrier (ULCC) Spirit Airlines has detailed capacity plans for the rest of the year. Heading into the third quarter, which starts in just a couple of weeks, Spirit Airlines is planning double-digit growth compared to the same quarter in 2019 and only plans to grow that come the fourth quarter. This will lead the airline to a modest capacity increase for the year compared to 2019, emphasizing the continuing improvement of the air travel industry.

After a year of cutting capacity, Spirit Airlines is now looking to increase it by double digits. Photo: Vincenzo Pace | Simple Flying.

Spirit Airlines plans third and fourth quarter capacity increases

Spirit Airlines had planned significant growth for 2020 and 2021 before the crisis hit. That led the airline to hit pause on its growth plans. Now, the carrier is coming back to business. After a year in recovery mode, the airline is back on its growth trajectory and is betting big on leisure travelers.

Just looking at data from 2021, the airline recorded capacity down 18.9% in the first quarter compared to the same time in 2019. In the second quarter, Spirit expects its final flown capacity to be down around 5.2% from the same quarter in 2019. However, from the third quarter, things start to change.

As passenger numbers increase and the recovery accelerates, Spirit is looking to match that with more flying and increased capacity. Photo: Vincenzo Pace | Simple Flying.

In the third quarter, which stretches from July through September, Spirit expects its capacity to be up 10% from the same quarter of 2019. If that is not impressive enough, come the fourth quarter, the airline expects its capacity to be up 21% compared to the fourth quarter of 2019.

Altogether, the capacity increases will see Spirit fly about 2.0% more capacity in 2021 than in 2019. While a relatively modest increase, this represents the start of the airline’s return to its growth trajectory.

An improving airline environment

The environment has gotten significantly better for airlines. As a ULCC, Spirit has an advantage in the recovery, as it is already suited to fly leisure and visiting friends and relatives (VFR) traffic at low, unbundled fares and turn a profit. While it has yet to turn a quarterly profit since the start of the crisis, the airline is getting closer to that goal each day.

Spirit A320neo
Getting back to profitability appears very near for Spirit Airlines. Photo: Vincenzo Pace | Simple Flying

In fact, Spirit now expects, based on an improvement in operating yields, its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) to be “modestly positive.” Yields have been helped by returning leisure travelers.

Spirit Airlines has seen an impressive recovery in leisure demand both in domestic and international markets. The continued improvement through the second quarter leads the airline to expect its load factor to hit 84% for the second quarter, with many flights going out well over that load factor. Even more, this is in line with the airline’s performance in the second quarter of 2019.

Spirit Airlines is willing to put up a fight

With most business travelers still waiting on the sidelines, Spirit Airlines is competing with plenty of other airlines for leisure traffic, and it is not willing to back down. The airline has continued its growth in 2021, including returning and adding new cities in Latin America and the Caribbean.

As Spirit targets double-digit growth, this will be driven by a mix of new routes and growing frequencies. As the airline has accelerated deliveries of new Airbus A320neo aircraft, with 16 total new aircraft planned to arrive this year, it will add more frequencies and grow its route network.

Spirit A321
Spirit Airlines has announced that it will come to Miami with a whopping 30 routes in the fourth quarter. Photo: Vincenzo Pace | Simple Flying

Much of Spirit’s growth is also targeting new routes. While plenty of already started in advance of the summer, including a daring transcontinental flight from LaGuardia, there are more new routes on the horizon. One of the biggest splashes expected in the fourth quarter will be the airline’s entrance at Miami International Airport (MIA), with 30 new routes planned. Plus, there will be growth in other markets like St. Louis and Louisville.

All in all, Spirit Airlines has a lot of runway left in the US, and it is accelerating for takeoff. The carrier has no dearth of options for new routes. The constraints on that growth will be limitations in the pace of Airbus deliveries, the hiring of enough crew to sustain the new routes, and access to both gate space and takeoff and landing rights wherever they want to fly.

Are you excited to see Spirit Airlines plan double-digit capacity increases later this year? Where do you want to see Spirit expand? Let us know in the comments!

Source : Simple Flying More   

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Passengers Learn To Adapt As Airlines Adopt Dynamic Pricing

With airlines keener than ever to maximize revenues, dynamic pricing is making inroads into the industry. Not everyone…

Passengers Learn To Adapt As Airlines Adopt Dynamic Pricing

With airlines keener than ever to maximize revenues, dynamic pricing is making inroads into the industry. Not everyone is welcoming the trend, but industry insiders say dynamic pricing can benefit both passengers and airlines.

Like it or not, dynamic pricing is here to stay in the airline industry. Photo: Don Wilson / Sea-Tac Airport

Airlines know a lot about their passengers, dynamic pricing harnesses that knowledge

Dynamic pricing is a process whereby an airline will pitch a fare at you based on what they know about you or think they know about you. Airlines are masters at gathering data. They harvest your frequent flyer data and track your searches and interests online via cookies. Hand over your Amex details to buy a drink inflight or a case of wine from the airline’s wine store and that airline gets an insight into your drinking preferences. Hundreds or thousands of these tracked behaviors all add up.

Log on to the British Airways website (or any airline’s website) after cleaning up your browser, and a message like this pop up.

“By continuing to use ba.com, you will be agreeing to the website terms and conditions and the use of cookies while using the website and our services. Please also read our privacy policy under which, to the extent stated, you consent to the processing of your personal data.”

Airlines already know a lot about their passengers – we’ve largely lost or surrendered that privacy battle. Now, many airlines are harnessing that data and learning to use it to boost revenues. On an individual passenger level, dynamic pricing tries to determine what a passenger is willing to pay to fly from Madrid to Heathrow next Sunday.

dynamic-pricing-airline-industry
Your favorite airline already knows a lot about you. Photo: Don Wilson / Sea-Tac Airport

Just how much will a passenger pay to fly at a certain time on a certain day?

Justin Jander, Director of Product Management at digital commerce platform PROS  says airlines are trying harder than ever to create a sticky end-to-end passenger journey. One way they can do that is to use artificial intelligence (AI) to learn from the past behavior of a passenger. The airline can then attempt to predict what they will do next – including what they are willing to pay for an airline ticket.

“Dynamic pricing is extremely relevant to the airline industry as it allows airlines to break away from the barriers of fare classes with fixed price points,” says Jander. “Imagine a scenario where there are two filled fares, one at $100 and the other at $200. If a passenger is willing to pay $150, the airline either offers that passenger the $100 fare and loses $50 in incremental income. Or the airline can offer the $200 fare and lose the entire $150. Having this flexibility to identify an optimal price point allows airlines to be more effective in capturing revenue.”

We know airlines adjust fares according to broad seasonal factors. We also know an airline will adjust fares to a particular destination at a certain time if a big event is on in that city, say a football final. Equally, airlines will drop fares at off-peak times to stimulate travel demand. Dynamic pricing is about taking this to a more granular, individual passenger level.

dynamic-pricing-airline-industry
Passengers can stand to benefit from dynamic pricing if they learn how it works. Photo: Ontario International Airport

Dynamic pricing can work for passengers

Justin Jander says dynamic pricing can work for passengers as well as airlines. At a basic level, interested passengers can learn how dynamic pricing works and is applied. It’s like learning how frequent flyer, hotel loyalty, or shopping programs work. Once you understand the nuts and bolts of dynamic pricing, passengers can potentially work dynamic pricing to their advantage.

“It is more expensive to acquire a new customer than to retain one,” says the PROS Director. “It makes sense for airlines to prioritize getting to know their existing customers.

“For passengers that are brand loyal customers of a particular airline, they will benefit from receiving personalized flight packages based on the AI that the airline has been able to leverage to understand them and their preferences.”

Most airline insiders agree dynamic pricing is here to stay. As the AI behind it gets smarter, so to will dynamic pricing. It will become more subtle and less driven by sometimes clunky algorithms. There always has been and always will be some tension between buyer and seller. Dynamic pricing in the airline industry won’t take that away> But over time, dynamic pricing may become better at fixing the median price that satisfies both airline and passengers.

Do you agree with dynamic pricing in the airline industry? Is it here to stay? Post a comment and let us know.

Source : Simple Flying More   

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