The Pandemic Has Not Restricted Spirit’s Growth Opportunities
Spirit Airlines does not believe the pandemic has restricted its growth opportunities. The airline’s CEO is still bullish…
Spirit Airlines does not believe the pandemic has restricted its growth opportunities. The airline’s CEO is still bullish on the opportunities ahead for the carrier, and it is eagerly anticipating an increase in demand for leisure travel closer to home, which will clearly benefit the airline.
Spirit Airlines believes growth is still on the horizon
Speaking today at the virtual 2021 Raymond James Annual Institutional Investors Conference, CEO Ted Christie stated the following on the airline’s growth opportunities:
“I would expect that the the opportunity set for Spirit is at least as big as it was going into the pandemic and probably larger. The reason that that I feel that’s true mostly has to do with allocation of dollars. So if you think about the travel wallet, and how much people were willing to spend on vacations and travel in the past, I think that there is going to be some component of the longest haul international travel that will be damaged for a period of time. And I don’t think that that travel wallet disappears. I think it probably reallocates to a different geography, which, for the US consumer means more likely domestic and nearfield international type flying.”
For the most part, Mr. Christie has a point. The majority of the travel demand right now is for domestic leisure travel, and there is a lot of room for Spirit to grow.
The near-term demand environment
For at least 2021, and perhaps even into 2022, the demand outlook for airlines will be based on domestic leisure travel. With travel restrictions in effect and some passengers worried about traveling internationally, it makes sense for Spirit to focus mainly on the markets where Americans want to fly.
Passengers have been flocking to outdoor and warm-weather destinations, ranging from Florida’s beaches to Colorado’s ski slopes. And, Spirit has been reacting accordingly and basing its capacity where the demand is.
Where could Spirit grow?
Over the past few years, Spirit has significantly expanded its route network based on its ultra-low-cost carrier (ULCC) business model. While Spirit does sell connections, which helps the airline extend its route network across Latin America and the Caribbean.
There is plenty of room for Spirit to grow in these markets. The airline could easily look at more island destinations in the Caribbean or else target some secondary cities, like Puerto Vallarta, in Mexico. Of course, however, there is much more room to grow within the US.
Recently, Spirit announced it would be coming to Milwaukee and Louisville in Wisconsin and Kentucky, respectively. With 16 new Airbus A320neos coming this year and already sitting on an excess aircraft, the airline can target a number of destinations.
First and foremost, Spirit is a little weak in the western United States. With California as one of the most important states in terms of air travel and population, the airline can seek additional opportunities in secondary cities, such as Ontario, or else run up seasonal flights to Palm Springs.
Salt Lake City, Albuquerque, and Boise are some major cities that are absent from Spirit’s route network that could be mostly origination points with some demand to those destinations that Spirit can attempt to stimulate with low fares.
Like El Paso or border destinations, additional destinations in Texas could also be good opportunities for Spirit. A few states away, in Missouri, St. Louis also sees no Spirit service with no easy alternate point of service that passengers who want to fly Spirit could drive to.
Lastly, of course, there is Florida. Spirit has no flights to the panhandle, Jacksonville, or Key West. These are some of the most important vacation destinations right now for leisure travelers and likely will be an important one for travelers.
Of course, these growth opportunities also include existing new city-pair flights for points already in the airline’s network. For example, Spirit does not currently fly between Dallas and Oakland.
Where do you want to see Spirit Airlines grow? Let us know in the comments!