It’s been rough years for Spirit Airlines. The airline that prided itself as home of the bare fares and as one of the most affordable travel options in the US has suffered greatly in the post covid years. Truth be told, the entire LCC or Ultra Low-Cost segment, as it’s referred to in the US has taken a massive blow. So much that the current dire state of affairs pushed Spirit to a massive change in its pricing strategy. Here’s what it’s all about.
What’s Going on with Spirit Airlines Fares?
Simply put? Everything is changing. The travel experience is being turned upside down in the effort to returning the airline to profitable territory soon. The airline has been haemorrhaging cash with the financial status progressively getting worse. Things got even tougher for Spirit Airlines when the DoJ blocked the proposed merger with JetBlue which would have solved this tricky predicament.
This tough situation drove the management to look for other streams of revenue. The only way to do so clearly was move away from the bare fares model and not allowing passengers to build tailored packages anymore.
Now the airline has introduced four fare tiers which bundle benefits in a standard way. Therefore, the passenger who wants to access one of those higher benefits will have to pay for the higher fare tier. I’ll dwell more in detail on this in the next paragraph.
The new four new pricing tiers are:
- Go
- Go Savvy
- Go Comfy
- Go Big
Basic fare level: Go will just get you the seat for a flight from point A to point B. However, now you can’t buy yourself one of those nice comfortable Big Front seats which are only included in the Go Big fare. You though still compose it purchasing baggage and seat selection. However, it will prove more convenient to book a higher fare with more benefits.
Fare level 2: Go Savvy as a fare includes a standard seat selection, a cabin bag, and a checked bag.
Fare level 3: Go Comfy adds to Go Savvy snacks and drinks along with Priority Boarding and more space as you are assured to have a central seat blocked.
Fare level 4: Go Big finally, adds group 1 boarding priority check-in, free Wi-Fi, and the big front seat.
Moving Away from the Bare Fares and Pay Just for What You Need Model
This is a major change in strategy for Spirit Airlines. What was once home to the bare fare tickets to which you could just add the services you needed is no more.
It was inevitable to move away from this strategy for Spirit Airlines, to try to generate more revenue. Bundling benefits in fare tiers in such a way forces travellers into an upselling spiral. You’ll have to purchase a higher fare tier to get the benefits you want at the best possible price.
This changes the core business model of the airline aligning it to many other airlines out there. But the market imposes change to survive and this seems to be the only change that can give Spirit Airlines a fighting chance. Only time will tell if this is a winning move. Q3 earnings will give us some more insights.