I don’t write much about airline financial results (I’ll leave that to others…I’ll just focus on writing about the Chase Sapphire card 3 days a week…oh wait, that’s not me. sort of.) Where was I? Oh yes, airline financial results.
Spirit Airlines announced their full-year financial results, and they were impressive, earning $76 million on about $1 billion in revenue. I wanted to point out a few areas that I thought were noteworthy:
- I know people complain about Spirit incessantly. That’s fine – you are entitled to your opinion, and I certainly agree with some of the issues people have (though not all). But that’s not stopping people from flying them. Spirit increased available seat miles (roughly, a measure of capacity) by 15% and grew load factors from 82% to 85%, meaning their planes were 85% full.
- People are paying those ancillary fees. Last year they made $35 per passenger from ancillary fees; this year that increased 28% to $44.79. Given their average fare of about $81, that means ancillary fees make up 35% of their revenue per passenger. That’s unbelievable. Charging people to bring a bag on board is certainly helping with that. But people are not pushing back — their passenger base keeps growing, and they continue to pay more in ancillary fees. In fact, ancillary fees grew 28% while fares only grew about 4%. What’s that mean? They can continue to promote low fares while still growing their revenue per passenger. I know that angers lots of people; but it doesn’t anger lots and lots of others.
- They would not have been profitable without ancillary fees. Their cost per passenger was about $92, but they only earned $81 from fares — an $11 deficit. They made up the difference (and quite a bit more) with ancillary fees. Those will continue to grow, since their profitability depends on it.
- No one is immune from rising fuel prices. Their cost per available seat mile (CASM) was $5.72 without fuel and $9.91 with fuel — fuel made up 42% of their total cost per mile.
Just wanted to share — if you hated Spirit before because of all the ancillary charges, you will likely hate them more in the future.