Spirit Airlines Case Study
Bad Customer Experience is a Headwind for Spirit Airlines
Shares of low-cost carrier Spirit Airlines (SAVE) are down close to 20% this year. Spirit thrives on being a low-cost carrier and generates a massive portion of its revenue from add-on sales. The company provides the cheapest ticket in the airline industry, however the company ranks lowest in customer satisfaction. Spirit Airlines ranked last in the latest travel report from the American Customer Satisfaction Index (ACSI).
According to a Spirit Airlines’ report, ticket price is the first thing that passengers consider when buying an airline ticket. However, despite offering the cheapest tickets, Spirit Airlines has struggled with its expansion plans.
This clearly indicates that price …show more content…
Air India offers cheaper tickets, but flight cancellation and delays are a common occurrence. It is for this reason, customers tend to avoid flying with Air India and tend to pay a little extra to travel with airlines with better customer service, and I can see the same happening with Spirit.
India’s per capita income is under $1,500 while America’s per capita income is close to $50,000. Clearly, people in India have considerably less disposable income and are still willing to pay extra so as to travel with an airline with better customer service. So, I think more people in America will be willing to switch from Spirit to airlines like JetBlue and Southwest that are customer-friendly and offer way better amenities.
Conclusion
Given the customer complaints, I don’t think everyone will be willing to fly with Spirit Airlines. I don’t think price is the only factor that people consider before buying a ticket, which is why I think Spirit Airlines will suffer because of its bad brand image. I will only consider Spirit Airlines a safe investment when the company makes effort to improve customer experience. Till then, I think investors should stay on the
Shares of low-cost carrier Spirit Airlines (SAVE) are down close to 20% this year. Spirit thrives on being a low-cost carrier and generates a massive portion of its revenue from add-on sales. The company provides the cheapest ticket in the airline industry, however the company ranks lowest in customer satisfaction. Spirit Airlines ranked last in the latest travel report from the American Customer Satisfaction Index (ACSI).
According to a Spirit Airlines’ report, ticket price is the first thing that passengers consider when buying an airline ticket. However, despite offering the cheapest tickets, Spirit Airlines has struggled with its expansion plans.
This clearly indicates that price …show more content…
Air India offers cheaper tickets, but flight cancellation and delays are a common occurrence. It is for this reason, customers tend to avoid flying with Air India and tend to pay a little extra to travel with airlines with better customer service, and I can see the same happening with Spirit.
India’s per capita income is under $1,500 while America’s per capita income is close to $50,000. Clearly, people in India have considerably less disposable income and are still willing to pay extra so as to travel with an airline with better customer service. So, I think more people in America will be willing to switch from Spirit to airlines like JetBlue and Southwest that are customer-friendly and offer way better amenities.
Conclusion
Given the customer complaints, I don’t think everyone will be willing to fly with Spirit Airlines. I don’t think price is the only factor that people consider before buying a ticket, which is why I think Spirit Airlines will suffer because of its bad brand image. I will only consider Spirit Airlines a safe investment when the company makes effort to improve customer experience. Till then, I think investors should stay on the