Spirit Airlines: still in the early phases of adapting to new competitive realities in the US

During the past year the US ULCC Spirit Airlines has been working to define itself in a new operating environment where it is no longer ignored by its larger rivals. The shifts undertaken by Spirit have included a minor pivot to smaller markets. They have also included its efforts to improve its operational performance to compete more effectively with large airlines that are in the process of using new fare classes to withstand the competitive threat posed by ULCCs.

In many ways Spirit remains in the early phases of crafting a strategy to address new market realities in the US, and progress is difficult to ascertain. Over the course of the past year, when the airline began undertaking changes to adapt to changing competitive realities, pricing in the US market sagged, with collective industry unit revenues plunging.

With the industry likely to return to positive unit revenue during 2017, Spirit's performance and execution of its strategy to sustain itself as the leading ULCC in the US market place will be scrutinised. Comparison of Spirit's historical performance in some financial metrics will reflect the new realities in the US market.