Spirit Airlines

Spirit Airlines

Introduction.

Spirit Airlines is facing challenges in the quality and delivery of airline services as a low-cost carrier in local and international markets. Constraints for Spirit Airlines include poor inflight service and all extra charging fees to passengers and baggage. Secondly, an internal inefficiency at Spirit Airlines is a formulation of questionable travel policies and hidden fees hence limiting consumer satisfaction. Moreover, lack of quality customer service and in-flight entertainment-based n tier is a form of market segmentation that is affecting revenue fortunes of the airline. In addition, a challenge manifests through instances of oversold boarding, leaving clients stranded in various travel routes. The imposition of the high cost of carrying- ons at the airline increases fare price, leading to a shift of loyal consumers to rival airlines such as Southwest Airlines and United Airlines.

To improve business and organizational sustainability at Spirit Airlines, the management is seeking to utilize Toyota Production System (TPS) in identifying inefficiencies and employing Lean manufacturing to reduce costs and enhance productivity. Reliance on profiling Spirit Airlines customers is critical in understanding the segmentation of potential consumers by age, gender, and factors such as income, thereby predicting future passenger traffic. A prediction model for passengers from the United States for Spirit Airlines focuses on the age of potential customers, the purpose of travel, the digital literacy levels, and the gender of airline passengers. The focus of this paper is detailing the benefits of Toyota Production System (TPS) in improving operations efficiency, Lean manufacturing in reducing organizational costs, Frequent Flyer Programmes in enhancing consumer loyalty and retention, and customer satisfaction as a means of assessing the quality of Spirit Airlines as a low-cost carrier.

How the airline business employ TPS concepts?

The Toyota Production System (TPS) applies to Spirit Airlines as a strategy to reduce operational costs and inefficiencies. The Just-in-Time concept could be utilized in the booking of available air tickets to avoid instances of oversold boarding by Spirit Airlines. The lean manufacturing method of production and operations reduces costs of Spirit Airlines in the storage of inventories, unallocated cabin crew, and challenges in the handling of consumer luggage (Mácsay, & Bányai, 2017). The TPS concept proposes halting of Spirit Airlines services during excess booking of tickets and informing consumers of luggage limitations to avoid providing non-standard services.

Lean manufacturing is beneficial to Spirit Airlines by increasing the competitive strength through operating as an ultra-low-cost carrier by minimizing costs of production and human capital. The TPS concepts propose handling of consumer complaints through the quickest and efficient method, such as allocating extra staff to improve customer satisfaction (Mácsay, & Bányai, 2017). Cost reduction as a TPS concept aims at reducing waste and inconsistencies in the productivity of employees, such as eliminating hidden extra fees. Lean manufacturing advocates the removal of unreasonable requirements by Spirit Airlines, including requiring passengers to pay for drinks and snacks in flight.

Lean Manufacturing and Constraints at Spirit Airlines

Lean manufacturing and the study of constraints may solve challenges that a competitive firm such as Spirit Airlines faces. Lean manufacturing focuses on the elimination of waste in the manufacturing process of Spirit Airlines and improving the quality of finished products, including in-flight entertainment, drinks, and snacks. As such, lean manufacturing has the potential to reduce in-flight complaints through the provision of accommodation and food at reduced costs and fixed overheads (Yamamoto, Milstead, & LIoyd, 2019). The study of constraints through the TPS concept focuses on improving the throughput while lean manufacturing aids in the elimination of waste that arises from limitation. Secondly, the research of constraints at Spirit Airlines focuses on eliminating wastages from poor ticket sales due to lack of brand prestige leading to erosion of organizational culture. The correlation of improved in-flight services without charging passengers extra fees and lean manufacturing is essential since the elimination of wastages correlates with increased consumer traffic for Spirit Airlines. Thirdly, the study of constraints focuses on improving the boarding capacity and number of airplanes available for passengers while maintaining an optimal workforce as a means of lean manufacturing.

The fourth benefit of a study of employing TPS concepts and lean manufacturing at Spirit Airlines is minimizing the imbalance of raw materials, such as availability of air tickets on time and the amount of waste in the production processes such as poor services by cabin crew of Spirit Airlines (Lubbe, Douglas, & Mclachlan, 2016). The study of constraints creates an imbalance to eliminate a limitation, such as increasing the number of employees handling inventories. At the same time, lean manufacturing aims at reducing the number of inventories, thus limiting the hiring of new employees.

Challenges identified through TPS concepts as Spirit Airlines

Constraints within Spirit Airlines may include a lack of sufficient boarding capacity and equipment to handle passenger luggage by Spirit Airlines. Tangible items such as passenger luggage become constraints in instances that lead to insufficient cabin crew or inventories, including drinks and snacks at Spirit Airlines. Inadequate staffing by the human resource departments at Spirit Airlines constitutes forms of constraints, which may limit the capability of an organization to fulfill organizational goals and objectives in the airline industry (Knorr, 2019). Lack of adequate booking and boarding space at Spirit Airlines leads to the concentration of employees, thus reducing their productivity while presenting little opportunities for creativity and innovation. Internal constraint emanates from inefficiencies in the management, production, and allocation of available cabin crew to improve consumer satisfaction. Poor or faulty equipment in the handling of passenger luggage by the airline can lead to time wastage, making an organization lose competitive advantage to competitors such as Southwest Airlines and United Airlines due to inferior output or missing on production targets.

Constraints leading to lack of lean manufacturing include organizational policies that limit the productivity or profitability of the airline, such as requiring passengers to utilize the Spirit Fare Club program before expiry. Redundant policies such as requiring passengers to pay for increased baggage charges may discourage potential passengers, leading to insufficient sales and revenue resulting from poorly motivated staff (Dimyati, 2018). Policies that stipulate hiring based on contacts could limit training of the essential workforce, thus giving rise to a mismatch of organizational goals and objectives. Other instances include the calculation of baggage charges inappropriately by Spirit Airlines, leading to losing potential passengers and casing wastages of resources and labor productivity.

External constraints assess through lean manufacturing by Spirit Airlines derive from activities that are beyond the control of an organization such as unhealthy competition practices by Southwest Airlines and United Airlines (Ahmed, Naseer, Asadullah, & Khan, 2020). Government regulations become constraints to an organization in ways such as mandatory airline quality checks, or operating timelines that limit their ability to maximize profits in the airline industry. Additionally, governments may formulate air travel policies and bureaucracies that are expensive and complex to enforce by Spirit Airlines, thus limiting the size of revenues and net earnings.

Constraints in the form of organizational culture at Spirit Airlines, such as letting poor allocation of cabin crew by human resource, leads to high operational and fixed costs in flight, thereby limiting the effectiveness of affirm. Organizational cultures, including Spirit Airlines that focus on raising the price of air tickets, may lead to the elimination of essential in-flight entertainment that is meant to improve on the quality of products and services (Srivastava, Naik, & Narula, 2018). Policies that lead to constraints ought to be eliminated by operational managers to allow instances of lean manufacturing in dominant and competitive firms in international markets.

Market constraints identified through the TPS concept by Spirit Airlines include dealing with demands that are not homogeneous from potential passengers, hence requiring the airline to invest in the specialization of goods and services. In the process of specializing in products and services in the airline industry, costs, and production overheads increases, reducing the level of profitability of a competitive firm (Reales, & O’Connell, 2017). The market constraint by Spirit Airlines also encompasses the inability to reach a specific passenger traffic numbers due to government regulations or ineffective logistics, such as limiting the flight durations of pilots in a specific airline.

Profiling Spirit Airlines customers

A prediction model for passengers from the United States for Spirit Airlines focuses on the age of potential customers, the purpose of travel, the digital literacy levels, and the gender of airline passengers.

Age as a predictor

The age of the participant as a predictor of future demand for low-cost carrier tickets influences pricing and inflight services by Spirit Airlines. Market analysis of ticket sales and consumer behavior by Spirit Airlines indicates higher booking by individuals between the ages of 24 to 55 years (Mehta, Rice, Deaton, & Winter, 2019). As such, consumer segmentation by age could inform Spirit Airlines on the dynamics of the market, thus devising tactical means of tackling dominant competitors in capturing market segments of passengers aged between 24 to 55 years. The market analysis includes the potential of the24 to 55 years population to provide sufficient demand for Spirit Airlines services due to the potential to earn incomes and often travel, hence enabling the airline to break even in costs and fixed overheads (Mehta, Rice, Deaton, & Winter, 2019). The market of air tickets from Spirit Airlines and luggage services indicates a rising purchase in low-cost carrier services and cargo transportation that qualify in receiving the Spirit Fare Club program. Given that the market is sustainability for cheap carrier air tickets, Spirit Airlines projects the sale of 100000 seats of GPS to 24 to 55 years market consumer segment during the first quarter of business operations, thereby enabling the firm to break even.

Gender as a predictor

The gender of the participant is vital in predicting passenger traffic since bookings were more in male consumers compared to female travelers. As such, Spirit Airlines benefits more from male passenger traffic, necessitating improving services to this particular market segment. Dominant brands limit new entrants into the market by discriminatory pricing, such as attracting a huge number of male passengers and making products appeal based on gender and masculine branding effects. For instance, Spirit Airlines ought to increase the number of female cabin crew since men prefer feminine customer care (Sezgen, Mason, & Mayer, 2019). As such, by prioritizing consumer segmentation based on gender attributes, Spirit Airlines could gain a competitive advantage compared to close competitors’ expensive products in the process of market penetration. Moreover, dominant firms in the airline industry, such as Spirit Airlines, allocate considerable budgets in the advertisement process through segmenting the market in preference to male passengers, thus improving the familiarity of new products and innovations (Sezgen, Mason, & Mayer, 2019). Allocating huge funds by Spirit Airlines in the marketing and product placement towards men as potential demand could become feasible and eliminating a going concern. A limitation that Spirit Airlines could experience is supply chain and logistical challenges of utilizing female cabin crews and male themed advertisements in sales and marketing. New firms lack established a supply chain and logistical networks for gathering raw materials and in delivering products to a particular segmented market, such as offering in-flight entertainment that is suitable to male consumers compared to both genders (Sezgen, Mason, & Mayer, 2019). During the short term of segmenting sales and target population by Spirit Airlines, the firm may experience high initial costs, thus demanding sufficient funding and reliance on consumer availability within reach of low-cost carrier airlines in local and international markets.

seat type pricing as a predictor

Suitable pricing of seat type at $125 for basic passengers and $199 business class relies on marketing decisions made by Spirit Airlines to enhance the diffusion of the low-cost carrier product into the local and international markets. Pricing by low-cost carrier tickets by seat type at $130 against close substitute’s price of $250 makes Spirit Airlines attractive for first purchases by passengers (Mehta, Rice, Deaton, & Winter, 2019). Secondly, Spirit Airlines avoids market segmentation of seat type for discriminative pricing, to ensure homogeneity of products, prices, and after-sales through all the ticketing locations in local and international markets. Additionally, Spirit Airlines offers discounts for air ticket consumers buying return tickets for economy seat type in the process of enhancing technological transfer and brand recognition.

purpose of travel as a predictor

The purpose of travel as a predictor of demand indicates work and family travel as the biggest contributor to airline passenger traffic. As such, Spirit Airlines ought to segment passenger demand based on the purpose of travel, and seeking to business travelers Spirit Fare Club program in the process of increasing consumer traffic (Sezgen, Mason, & Mayer, 2019). The process of implementing the business idea into actionable entrepreneur opportunities by Spirit Airlines seeks to rely on understanding the purpose of travel by potential passengers. Initially, Spirit Airlines considers supplying of 100000 air tickets to business and family passengers to booking outlets in the United States and international low-cost carrier markets, thereby limiting holding income on huge inventories in line with lean start-up and manufacturing. In terms of staffing, Spirit Airlines employs more than 74 cabin crew personnel for every destination, disregarding limiting costs and fixed overheads while making it easier to exploit available passenger traffic (Reales, & O’Connell, 2017). Spirit Airlines expects viable profits and revenues after the fourth quarter of business by focusing on business and family market segments, indicating the potential to recover initial capital. However, due to increased restrictions to market entry by dominant firms, Spirit Airlines management included a 9 month grace period for the venture to be viable for profits while focusing on particular travel routes and passengers.

level of income as a predictor

Frequency of travel in a year of passengers relied on occupation, level of income, and factors such as age. The annual income was essential in predicting passenger traffic for Spirit Airlines. A typical target consumer by Spirit Airlines encompasses individuals with smartphones, laptops, and devices as an indicator of high incomes and additional disposable incomes hence having the capability to allocate more than $10 for inflight entertainment(Ahmed, Naseer, Asadullah, & Khan, 2020). Potential consumers in Spirit Airlines ticketing and booking platforms are willing to spend more than $156 on travel costs, thus informing the marketing department at the airline of price and demand dynamics. The market that Spirit Airlines seeks to satisfy is the middle-income earners with the ability to afford monthly air travel and ticket packages under the Spirit Fare Club program. Spirit Airlines targets middle income and working consumers, seeking to tap from more than 400 million airline passengers annually in the United States market.

digital literacy as a predictor

Target audience is individuals with digital literacy, to be enabled to use online platforms for booking of air tickets and other forms of inflight entertainment. As such, primary targets include a resident of urban areas with a stable and reliable income. The Spirit Airlines enterprise targets age groups of between 24 years to 55 years, hence providing sufficient passenger traffic past the 10 million passengers annually.

Measuring customer satisfaction.

This section of this paper is conducting customer satisfaction assessment through a SWOT analysis of Spirit Airlines services, price of tickets, quality and value of inflight services, level of staff professionalism, and baggage services.

Among Economy cabin passengers, customer satisfaction relates with professional and friendly staff, since the price of tickets and baggage is not a consideration. Assessing the quality of services to Economy cabin passengers is crucial due to higher passenger traffic in this market segment (Dimyati, 2018). As such, Spirit Airlines, as a competitive firm ought to advantage of operating in exclusive low-cost carrier markets of economy cabin passengers, and improving the level of professionalism and friendliness of cabin crew Spirit Airlines.

Data collection relied on random sampling methods of available literature review that provides a profile and going concern analysis of Spirit Airlines. Random sampling preferred data within the previous two financial years, which would provide a current analysis of operations, a number of employees, and statistics such as in-flight entertainment (Knorr, 2019). Qualitative sampling measured qualitative elements such as quality customer service and the value of the brand in advertising markets.

Customer satisfaction among Low-cost airline passengers is the cost of tickets by Spirit Airlines. Spirit Airlines, as the principal low-cost carrier airline in the United States and international destinations in Europe and Asia, ought to offer minimum prices to potential consumers. The competitive advantage of the airline relies on government support and completing more than 1,000 low-cost flights per week while recording minimal threats to passengers and equipment in the low-cost carrier market segment (Lubbe, Douglas, & Mclachlan, 2016). Dominance in international markets of Europe and the United States manifests the ability of the airline to guarantee passenger safety and training crew and engineers of quality customer service. While delivering business, tourist, and individual passengers to more than 55 travel destinations, Spirit Airlines trains more than 20000+ employees to adhere to ethical guidelines and international aviation rules. Offering quality in-flight entertainment improves consumer loyalty, and plans to invest in exclusive lounges in the coming financial years.

Customer satisfaction of the Premium cabin passengers segment focuses on the quality and uniqueness of in-flight entertainment, comfortability of seats, and flight disruptions. Spirit Airlines is inherent in opportunities through quality and unique in-flight entertainment, thus improving passenger experience and word of mouth advertising. A rare opportunity is a healthy competition and collaboration with Singapore Airlines on the training of pilots and crew (Yamamoto, Milstead, & LIoyd, 2019). Benchmarking of quality customer service through partnerships with local Airlines enhances business and employee productivity while delivering passengers to destinations in Europe and Asia. To gain an edge while operating in highly competitive markets, Spirit Airlines derives opportunities from the installation of a new fleet, translating to increased consumer traffic and revenues. Moreover, providing potential consumers and passengers with a rich and unique customer experience improves the chances of second purchases.

A customer satisfaction determinant of overall passengers to Spirit Airlines is threats such as airline safety, time arrival record, and addressing consumer complaints promptly. Lack of addressing consumer complaints is both an external and internal threat that Spirit Airlines faces in the low-cost carrier markets, hence reducing revenue and profit margins. Additionally, lower consumer traffic makes it difficult for the airline to break even in terms of fuel costs and other fixed overheads (Yamamoto, Milstead, & LIoyd, 2019). Reducing passenger and cargo minimizes profit margins, leading to considerations of increased advertising and product placement in mass media. A change in government policies in international markets such as subsidizing local airlines enhances competition with Spirit Airlines, requiring a lowering of air tickets. Moreover, dynamics in international aviation rules and statutes are affecting a number of destinations and reducing the effectiveness of national carriers in specific routes due to poor diplomatic relations.

Frequent Flyer Programmes

Frequent Flyer Programmes are an essential tool by airlines such as Spirit Airlines in engaging with customers personally. Through the issuance of cards and rolling out the Spirit Fare Club program, thereby increasing communications with potential Spirit Airlines customers. As a tool of engaging with passengers, Frequent Flyer Programmes offer airline avenue store and receive a consumer complaint, and communicating about discounts and Spirit Fare Club program (Mácsay, & Bányai, 2017). Airlines utilizing Frequent Flyer Programmes have the potential to improve sales between 26% and 51% of their gross market capitalization. For instance, Spirit Airlines could derive revenues from 51% of their passengers by using fare prices and frequency of travel as a determinant of bonuses.

Secondly, Frequent Flyer Programmes offer opportunities to induce repeat patronage with passengers, such as creating brand loyalty and improving familiarity of consumers with the nature of services (Reales, & O’Connell, 2017). Increased patronage with consumers is vital in understanding consumer demands during travel, such as luggage services and in-flight entertainment. As such, Spirit Airlines has the potential to improve the quality of services and consumer experience through Frequent Flyer Programmes.

Frequent Flyer Programmes offer airlines with opportunities to create a barrier between passengers and competitor airlines. For instance, quality services by Spirit Airlines through the Spirit Fare Club program as Frequent Flyer Programmes manipulates employees against buying and traveling with competitors (Reales, & O’Connell, 2017). When passengers opt for competitors, inflight services could be different and offering varying benefits, hence influencing consumers to stick with specific airlines. Human resource strategies that Spirit Airlines ought to consider and implement are passengers’ preference for uniqueness and comfort through the Frequent Flyer Programmes. Improving the quality of services and in-flight entertainment in the local low-cost carrier markets is essential following a rise in air tickets. HR strategies through Frequent Flyer Programmes include improvising the rate of reliability of crew and airport services, hence reducing time wastages and use of competitor services by passengers (Reales, & O’Connell, 2017). However, rising fixed costs and overheads in the short term reduces profit margins, and the ability of a human resource to manage available social capital. A second HR strategy consideration is the training of pilots and crew, necessitating the allocation of additional finances. Due to volatilities in the airline industry and the cost of fuel, allocating huge costs in pilot and crew training minimizes available liquidity of Spirit Airlines in the short and long term.

Frequent Flyer Programmes are potent data mining tool through the gathering of personal consumer data and financial behaviors, and utilizing the data in predicting future travel activities. For instance, through the Spirit Fare Club program, Spirit Airlines stores personal data collected from travel bookings, and predicting return dates. The potential of Frequent Flyer Programmes to offer inferences on patterns and financial spending is crucial in understanding prices that consumers are willing to pay.

Airlines, however, are migrating from determining Frequent Flyer Programmes through distance flown to favoring fare and frequency of travel. By relying on ticket and rate of travel statistics, Frequent Flyer Programmes can determine bonuses and inflight benefits that consumers are to receive (Lubbe, Douglas, & Mclachlan, 2016). New global destinations for the Upper Middle Class and diverse cultures in air hostesses are a reliable HR strategy. Moreover, increasing the number of tie-ups with airports and accommodation infrastructure by Spirit Airlines in foreign countries reduces the costs of managing a diverse workforce across several states. An HR strategy is increasing the sharing and mobility of human capital with other airlines, including JetBlue Airways and Delta Airlines, due to their proximity, thus reducing the costs of accommodation and welfare of employees. HR strategies of increasing the number of foreign crew and expatriates would enhance brand recognition and receiving a higher aviation rating.

Modern airlines, including Spirit Airlines, view FFPs as opportunities to increase consumer traffic and organizational revenues. Data indicates that US low-cost carriers derive more than 60% of revenues from Frequent Flyer Programmes, hence shifting the airline’s industry toward a credit card issuing sector (Reales, & O’Connell, 2017). Strengths of Spirit Airlines in local and international low-cost carrier markets include a skilled and diverse workforce. The reliance on more than 20000+ employees enhances customer care and quality in-flight entertainment. Operating in more than 55 travel destinations increases the visibility of Spirit Airlines, thus benefiting from informal forms of marketing at reduced costs. The branding and visibility of the airline increase consumer traffic and the level of trust and confidence of the crew (Yamamoto, Milstead, & LIoyd, 2019). Potential weaknesses are reducing international low-cost carrier destinations due to the protection of local airlines by governments. Spirit Airlines has to explore alternative income streams to counter the effect of high operating and fixed costs that are eroding profit margins. A weakness that senior management ought to manage is intense competition in local markets, from an airline such as JetBlue Airways and Delta Airlines. A slow pace in improving market share growth translates to strengthening competitors, thus creating a going concern for the management of Spirit Airlines.

Conclusion.

Customer satisfaction is essential in gauging the effectiveness of programs such as Frequent Flyer Program, and benefits in the retention of loyal consumers while increasing sales and revenues. Tier 1 Cardholder of Frequent Flyer Programmes adds up to more than 290 million passengers annually, with personal spending estimated past $200 million every year. Low-cost carrier airlines such as Spirit Airlines could focus on providing loyal consumers with co-branded credit cards. Tier 3 passengers receive minimal travel benefits and bonuses through Frequent Flyer Programmes, due to lower personal spending of less than $10 million annually. A prediction model for passengers from the United States for Spirit Airlines focuses on the age of potential customers, the purpose of travel, the digital literacy levels, and the gender of airline passengers. The concept of lean manufacturing can benefit Spirit Airlines by eliminating constraints by reducing the number end size of inventories in terms of passenger bookings. Moreover, Frequent Flyer Programmes determines passenger’s capabilities by tier status, thereby offering potential consumers with specific booking discounts and cabin classes.