Spirit Airlines Update
Matt Klein, SVP and chief commercial officer for Spirit Airlines discusses the current demand environment in the US, the push by US majors to maximise connectivity at their hubs and dynamic pricing of ancillary products.
Transcript
Matt KleinWe got our deal done with our pilots about six weeks ago or so. Everything closed. Now we're in the process of ... we're sort of doing it in two phases. We've gone past phase one now of requesting some information and then we'll be starting the formalized process and that should take us through this year. We'll be working on that throughout this year and I'm really excited about the opportunities there.
How we view dynamic pricing of ancillary products is akin to how revenue managing has happened on tickets, the ticket price for decades, starting to come into the non-ticket or the ancillary world as well. For us, that means we can think about new products, but more importantly the ones that we have today, we can also learn how to better optimize the value. In some cases, that also includes reducing the price for people as well using revenue management theories and techniques across other travel products.
For the first half of this year, we continue to see a pretty competitive environment out there, but the underlying demand is very strong. We are seeing the peak periods act as peak periods and we're seeing the off peak periods show a little bit of price weakness but not demand weakness. There's a lot of demand out there and it's something that we think should bode well as we head into the summer and then come out of the summer into the fall into the fourth quarter.
That's still pretty early, and what we're seeing right now is, like I was saying earlier, there's continued competition out there, but generally speaking, there definitely seems to be more demand than there is supply, so right now everything seems to be okay. The question is gonna be what happens down the line if we have continued ASM growth at these levels domestically, what's that gonna be next year and the year after? Supply and demand is always ... those laws always work themselves out. We'll just see how that moves forward. For us at Spirit, it works right into what we do best, which is provide low fares for our customers to go wherever they want to fly around the country and into Latin America and the Caribbean. For us, we're not afraid of low fares, we embrace low fares. It's something we've had for a while, and it's something that will never leave who we are.
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