Expansion Strategy For Spirit Airlines - Yesenia Alvarez

Running Head: SPIRIT AIRLINES, INC
Business Plan - Research Project
SPIRIT AIRLINES, INC. LESS MONEY, MORE GO.
Yesenia Alvarez Perez
Atlantis University
Professor, Dr. Armando Salas-Amaro
MBA710: Capstone Field Project
November 23, 2016
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Running Head: SPIRIT AIRLINES, INC
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Table of Contents
I. Executive Summary ----------------------------------------------------------------------------- 5
II. Company Overview ----------------------------------------------------------------------------- 7
2.1 Legal Form ------------------------------------------------------------------------------------ 7
2.2 Mission Statement ---------------------------------------------------------------------------- 8
2.3 Vision Statement ----------------------------------------------------------------------------- 8
2.4 Goals and Objectives ------------------------------------------------------------------------ 8
2.5 Current Business Model and Strategy ----------------------------------------------------- 9
2.6 Proposed Strategy ---------------------------------------------------------------------------- 11
Strategic Recommendation ----------------------------------------------------------------- 11
Strategic Alignment -------------------------------------------------------------------------- 12
Expected Results ----------------------------------------------------------------------------- 12
Strategic Implementation -------------------------------------------------------------------- 13
Exhibit 1. Balance Scorecard --------------------------------------------------------- 15
III. Market Research -------------------------------------------------------------------------------- 16
3.1 The Airline Industry -------------------------------------------------------------------------- 16
Ultra-Low-Cost-Carriers (ULCCs) -------------------------------------------------------- 17
Airline Industry Trends ---------------------------------------------------------------------- 17
Risk Factors in the Airline Industry ------------------------------------------------------- 18
3.2 Competition ----------------------------------------------------------------------------------- 19
Exhibit 2. Airline Industry Organization --------------------------------------------- 19
Competition Analysis ------------------------------------------------------------------------ 20
Exhibit 3. Industry Rivalry Analysis -------------------------------------------------- 20
Exhibit 4. Airline Industry’s Mayor Market Players -------------------------------- 21
Exhibit 5. Airline Industry Market Share --------------------------------------------- 22
New Route Competition and Market Analysis ------------------------------------------- 22
Exhibit 6. Fort Lauderdale Airport Main Airlines Serving Ecuador ------------- 25
Exhibit 7. Miami International Airport Main Airlines Serving Ecuador--------- 26
3.3 Target Market --------------------------------------------------------------------------------- 28
The Ecuadorian Market ---------------------------------------------------------------------- 28
Exhibit 8. Ecuadorian Origin Population in the U.S 2013 ------------------------- 28
Exhibit 9. U.S Population by Ethnicity and Ecuadorian Origin ------------------- 31
Potential of the New Market and Purchasing Trends ----------------------------------- 32
Exhibit 10. Purchasing trends for the Ecuadorian Market ------------------------- 32
Fuel Prices and Ecuadorian Economy ----------------------------------------------------- 34
3.4 Marketing Strategy --------------------------------------------------------------------------- 35
3.5 New Strategy Marketing Campaign ------------------------------------------------------- 36
IV. Product / Service --------------------------------------------------------------------------------- 36
4.1 Current Product Strategy -------------------------------------------------------------------- 36
Product & Fare Structure -------------------------------------------------------------------- 36
Exhibit 11. Flight Price Composition ------------------------------------------------- 37
Exhibit 12. Optional Services Structure ---------------------------------------------- 37
Third Party Service Providers -------------------------------------------------------------- 39
Current Route Structure --------------------------------------------------------------------- 39
Exhibit 13. Spirit Airlines Route Map ------------------------------------------------ 40
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Exhibit 14. Spirit Airlines Main Destinations by Region -------------------------- 41

4.2 Main Features of the New Product/Service to offer ------------------------------------- 41
Mariscal Sucre International Airport Quito, Ecuador------------------------------------ 42
Exhibit 15.Quito International Airport Fees------------------------------------------ 44
Aircraft Configurations ---------------------------------------------------------------------- 45
Exhibit 16. Airbus A321 Main Features --------------------------------------------- 46
V. Organizational Design -------------------------------------------------------------------------- 47
5.1 Organizational Structure -------------------------------------------------------------------- 47
Exhibit 17. Spirit’s Organizational Structure ---------------------------------------- 47
Exhibit 18. Spirit’s Operations Chart ------------------------------------------------- 49
5.2 Decision Making Process ------------------------------------------------------------------- 50
5.3 Internal Processes ---------------------------------------------------------------------------- 50
5.4 Means of Communication ------------------------------------------------------------------- 51
Communication with Employees ---------------------------------------------------------- 51
Communication with Customers ----------------------------------------------------------- 51
Communication with Stakeholders -------------------------------------------------------- 52
5.5 Environment and Impact of the Organizational Structure ------------------------------ 52
5.6 Motivation Effects ---------------------------------------------------------------------------- 53
5.7 Information and Technology ---------------------------------------------------------------- 53
Exhibit 19. SWOT Analysis ------------------------------------------------------------ 54
VI. Human Resources ------------------------------------------------------------------------------- 54
Exhibit 20. Spirit Airlines’ Staff Composition -------------------------------------- 55
6.1 Human Resources Management ----------------------------------------------------------- 56
Recruitment and Hiring Process ------------------------------------------------------------ 56
Training Process ------------------------------------------------------------------------------ 56
Compensation and Benefits ----------------------------------------------------------------- 58
Safety and Security --------------------------------------------------------------------------- 58
Organizational Culture ---------------------------------------------------------------------- 59
VII. Financial Analysis ---------------------------------------------------------------------------- 60
7.1 Statement of Operations --------------------------------------------------------------------- 60
7.2 Balance Sheet --------------------------------------------------------------------------------- 62
7.3 Statement of Cash Flows -------------------------------------------------------------------- 64
7.4 Company’s Financial Analysis ------------------------------------------------------------- 67
Liquidity and Capital Resources ----------------------------------------------------------- 67
Profitability ------------------------------------------------------------------------------------ 68
Solvency --------------------------------------------------------------------------------------- 68
7.5 Cost and Revenue per Available Seat Mileage ------------------------------------------- 69
Exhibit 21. Operating Revenues ------------------------------------------------------- 69
Exhibit 22. Operating Expenses ------------------------------------------------------- 69
Exhibit 23. Operating Profitability ---------------------------------------------------- 70
7.6 Financial Highlights 2016 ------------------------------------------------------------------- 71
7.7 Financial Forecasting for the New Strategy ---------------------------------------------- 72
Exhibit 24. Cost & Revenue Forecasting --------------------------------------------- 72
Exhibit 25. Revenue Forecasting ------------------------------------------------------ 73
7.8 Trend Analysis ------------------------------------------------------------------------------- 73
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Exhibit 26. Comparison of Domestic RASM and CASM ------------------------- 73

Exhibit 27. Domestic RASM / CASM by Airline (Operation Profit) ----------- 75
Revenue Analysis ----------------------------------------------------------------------------- 75
Exhibit 28. System Service Fees and Ticketed Revenue -------------------------- 76
Exhibit 29. Domestic RASM by Airline-Stage-Length --------------------------- 77
Cost Analysis ---------------------------------------------------------------------------------- 77
Exhibit 30. System CASM by Group ------------------------------------------------ 78
Exhibit 31. Domestic CASM Details for Individual Carriers -------------------- 79
VIII. Legal And Ethical Analysis ---------------------------------------------------------------- 79
8.1 U.S. Ecuador Air Transport Agreement -------------------------------------------------- 79
8.2 Civil Aviation Law -------------------------------------------------------------------------- 80
8.3 Airline Industry Regulation ---------------------------------------------------------------- 80
Operational Regulation --------------------------------------------------------------------- 80
International Regulation -------------------------------------------------------------------- 81
Security Regulation ------------------------------------------------------------------------- 81
Environmental Regulation ----------------------------------------------------------------- 82
Exhibit 32. Spirit’s Future Fleet Plan ------------------------------------------------ 83
Labor Regulations --------------------------------------------------------------------------- 83
8.4 Code of Business Conduct and Ethics ---------------------------------------------------- 84
IX. Conclusions -------------------------------------------------------------------------------------- 85
X. References ------------------------------------------------------------------------------------------ 86
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Spirit Airlines, Inc. Less Money, More Go.
I. Executive Summary
Spirit Airlines (NASDAQ: SAVE) is an ultra-low-cost, low-fare airline that offers
affordable travel to price-conscious customers. The Company currently operates more than 385
daily flights to 56 destinations in the United States, Caribbean and Latin America. The company
is currently the market leader in operating profitability with a high density young fleet that
increases significantly its load passenger factor and gives it a great potential of expanding its
operations to more countries in South America such as Ecuador, a current unserved market with
great growing potential and which have been in the plans of the company for several time.
Its ultra-low-cost carrier (ULCC) business model, allows it to compete principally by
offering customers its Bare Fares (Non-ticket revenue), which are unbundled base fares that
remove components traditionally included in the price of an airline ticket, giving customers Frill
Control, which provides customer the freedom to save by paying only for the options they choose
such as bags, advance seat assignments and refreshments.
The Company currently has approximately 4,850 employees including pilots, flight
attendants, flight dispatchers, mechanics, airport agents and administrative roles. Spirit Airlines
was founded in Michigan in 1964 as Clippert Trucking Company, but began air charter
operations in 1990 renaming themselves as Spirit Airlines in 1992. Currently the company’s
headquarters is based in Miramar, Florida. (Form 10K, 2016).
The company is expanding at a high speed, considering unserved markets and destination
with high demand volumes to help its passengers save money and connect with their beloved.
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This year, the company announced the opening of its new Havana, Cuba route, a strategic
tourist spot that is taking Spirit one step ahead of its competitors and is increasing customer and
passenger recognition.
The Company’s increasing good financial results, gives it the possibility to continue
expanding at a faster speed its market share and compete with the big carriers boosting air traffic
and economic development with lower prices.
Highlights
$2,500,000
$2,000,000
$1,500,000 Net Profit

Net Income
$1,000,000
Revenue
$500,000
$-
2013 2014 2015 Sept 2016
II. COMPANY OVERVIEW
2.1 Legal Form of the Company
Name: Spirit Airlines, Inc
Type of Company: Corporation
FEI/EIN Number: 38-1747023
Current Address: 2800 Executive Way, Miramar, Fl 33025
CEO: Robert Fornado
Stock Market (NASDAQ): SAVE
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2.2 Mission Statement
Spirit Airlines (NASDAQ: SAVE) is an Ultra Low Cost Carrier committed to offering
the lowest total flight ticket price to our budget conscious travelers in the U.S., Latin America
and the Caribbean, helping people save money and travel more often, creating new jobs and
stimulating business growth in the communities we serve. With our Fit Fleet, the youngest fleet
of any major US airline, we offer new routes and possibilities to connect people, offering the best
experience and providing the best service. (Spirit Airlines, 2016).
2.3 Vision Statement
To be a high growth carrier, earning mid-teens margins and delivering high results. We
are committed to offering friendly, consistent and reliable service (Spirit Airlines, 2016).
2.4 Goals and Objectives
One of the main goals of the company by 2016 is to improve its customer experience
while maintaining its low cost structure and delivering strong returns for its shareholders,
focusing on the following objectives:
 Delivering friendlier service;
 Improving their operational reliability and recoverability;
 Reducing their complaint ratio through better operations, continued education
efforts, and “smoothing: the edges;
 Enhancing merchandising opportunities with deployment of mobile website;
 Increasing take rate through more customized pricing (i.e., revenue management)
 Offering more products / capturing a larger piece of the travel budget;
 Enhancing loyalty spend by improving benefits and products;
 Keeping a consistent focus on maintaining low unit operating costs;
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 Ensuring our sourcing arrangements with key third parties are regularly
benchmarked against the best industry standards;
 Generating and maintaining an adequate level of liquidity to insulate against
volatility in key cost inputs, such as fuel, and in passenger demand that may occur
as a result of changing general economic conditions.
2.5 Current Business Model and Strategy
The Company uses an ULCC (Ultra-Low-Cost-Carrier) business Model, driven by their
low cost structure, which permits them to offer low base fares while maintaining high profit
margins. The company is focused on price-sensitive travelers who pay for their own travel, with a
business model designed to deliver low fares, helping to increase passenger volume, load factors
and non-ticket revenue on the flights it operates. The company also has high-density seating
configurations on their aircraft and a simplified onboard product designed to lower cost, which is
part of their Plane Simple Strategy, consisting on:
Ultra-Low Cost Structure: The company’s unit operating costs are among the lowest of
all airlines operating in the United States, reaching it in large part due to:
 High aircraft utilization;
 High-density seating configurations on their aircraft and simplified onboard
product designed to lower costs:
 No hub-and-spoke network inefficiencies;
 Highly productive workforce;
 Opportunistic outsourcing of operating functions;
 Reduced sales, marketing and distribution cost through direct-to-customer
marketing;
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 Efficient flight scheduling, including minimal ground times between flights;
 A company-wide business culture that is keenly-focused on driving costs lower.
Innovative Revenue Generation: The company executes its innovative, unbundled
pricing strategy to generate significant non-ticket revenue, allowing to lower base fares and
enabling passengers to identify, select and pay for only the products and services they want to
use, with the following strategies:
 charging for checked and carry-on baggage;
 passing through all distribution-related expenses;
 charging for premium seats and advance seat selection;
 maintaining consistent ticketing policies, including service charges for changes
and cancellations;
 generating subscription revenue from its $9 Fare Club low-fare subscription
service;
 deriving brand-based revenues from proprietary services, such as its FREE
SPIRIT affinity credit card program;
 offering third-party travel products (travel packages), such as hotel rooms, ground
transportation (rental and hotel shuttle products) and attractions (show or theme
park tickets) packaged with air travel on its website;
 selling third-party travel insurance through their website; and
 selling onboard advertising.
“Our ultra-low cost structure coupled with a diverse, stable ancillary revenue model
provides a platform to earn high margins, generate strong cash flows, and strengthen our balance
sheet leading to more growth opportunities” (Spirit, 2016)
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2.6 Proposed Strategy
Strategic Recommendation
This proposal aims to study and pursue the expansion strategy for Spirit Airlines into the
Ecuadorian Market in order to promote connectivity between United States and Ecuador;
increasing the tourist and economic development between the two countries. Ecuador is growing
in stature as a major emerging regional tourism destination in South America and is perfectly
aligned to the company’s strategy of providing low cost flights to unserved or underserved
markets. Furthermore, the future for Quito is looking bright, with over $87 million in hotel
investment announced over the next 10 years (BC, 2014). This represents a great opportunity for
Spirit Airlines as an ultra-low cost carrier as the economy is being stimulated and therefore the
demand of flights to this destination is growing gradually.
There are a number of U.S. and international airlines serving routes from the United States
to Ecuador. Avianca, Delta Airlines, JetBlue Airways, American Airlines, TAME, Copa Airlines,
Aeromexico and United offer a total of more than 100 flights arriving in Ecuador from the U.S.
each week. However, Spirit can easily offer very low fares and higher number of passenger per
flight, as well as taking advantage that its target market for this route are budget conscious
Ecuadorian travelers that value low fares, which Spirit a competitive advantage among the other
carriers.
On the other hand, two main international airports serve Ecuador, one located in Quito
(Mariscal Sucre International Airport) and the other in Guayaquil (Jose Joaquín de Olmedo
International Airport). Both airports are also used for domestic flights. Local airlines TAME,
LAN Ecuador, and Avianca Ecuador offer regular service between the principal cities of
Ecuador.
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As a matter of this new expansion strategy for Spirit Airlines, my suggestion is for the
Company to start operating flights from its Fort Lauderdale (FLL) hub to the Mariscal Sucre
International Airport in Quito (UIO) at a daily basis, competing mainly with JetBlue which
recently started operations to same destination in February 2016.
Strategic Alignment
This strategy is perfectly aligned with the Company’s goal of Offering more products and
therefore capturing a larger piece of the travel budget, while attending this Ecuadorian market
with strong presence in the U.S, maintaining its low unit operating costs and being aligned with
the Company’s mission of helping people save more money and travel more often.
This strategy is also aligned with the ultra-low cost structure of the company boosting its
Aircraft utilization with the advantage of having the youngest fleet among its competitors with a
high-density seating configurations and simplified onboard products which provides higher
RASM (Revenue per Available Seat Mileage).
Spirit is being expanding rapidly to the South American market, and taking advantage of
its current capacity and financial position, this Strategy perfectly match with the Company’s
mission and will definitely contribute to reach its vision of being a high grow carrier.
Expected Results
The opening of the Quito route will be a very positive update to Spirit, not only for the
increasing demand of budget conscious passengers that fly to this destination, with a target
market population of over 680,000 Hispanics of Ecuadorian origin living in the U.S and their
families willing to travel from Ecuador at very low prices; but also because this new route will
increase revenue in over 15% at a very competitive cost basis and an estimated Gross Margin of
58%.
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Apart from posting impressive traffic numbers, this strategy will allow Spirit to explore
closely the South American Market as a potential strategic area to expand operations to more
destinations in the future. With its great and strong presence in the Colombian market, Spirit can
consider this new opening in Quito, as the first step to star considering opening a South
American Hub to serve this market; being Colombia one of the main options for this matter.
Quito can be easily Spirit’s 60th destination after the opening of the current Havana Cuba
route, being aligned with Spirit’s mission of helping people save money and travel more often,
creating new jobs and boosting the economies of the two countries.
Strategic Implementation
In order to implement this strategy, Spirit Airlines will use its main Hub at Fort
Lauderdale Airport to serve this route. This strategic position allows the company to connect
flights coming from any destination in the U.S as well as the Caribbean, and Centro America.
The company currently has its own high density aircraft A321ceo and the upcoming
A321neo, with a longest range and higher seat configurations which allows it to operate a full
flight of around 220 passenger each way, for a total of 440 roundtrip.
The company will use its own personal to operate the flights, with a designation of 2 pilots
and 4-6 flight attendants per flight. In order to do this, it is also important for the company to
consider hiring local talent in order create jobs and being aligned with is mission, as well as
taking advantage of the language requirements for this Hispanics of Ecuadorian origin target
market.
This strategy will require the company to start negotiation with the Ecuadorian Market in
order to show the important of this route, not only for the U.S but also for Ecuador. Airport
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licenses and fees are also required in order to start operations. A list of the current Airport fees at
Mariscal Sucre International Airport is displayed in the Product/ Service section.
A Benchmarking analysis of the current direct and indirect composition is also required in
order to determine the best hours of operations and average price Spirit should offer in order to
make this route more efficient. A deep study of the Competition is provided in the next section.
This new approach will also require the company to improve its customer service
experience by offering the same inflight services and proper information the passenger requires.
Spirit will require to utilize and improve its online services and to start using its mobile
application to help customer to use their Frill Control by knowing the proper information about
their flights.
This strategy is also subject to approval from the Department of Transportation.
Below is the Balance Scorecard analysis, stating the targets and expected results and
initiatives for each category: financial, Customer, Internal and learning.
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Spirit Airlines’ Balance Scorecard

New expansion strategy to Ecuador
Simplified Strategy Map Performance Measures Targets Initiatives
FINANCIAL
Increase Op.
Profitability  Market Value  20% per year  New Ecuadorian Route
 Seat Revenue  15% per year opening
 Operating costs  5% per year  Optimize resources
Lower Increase
 High Aircraft Utilization
Costs Revenue
CUSTOMER  # Customers  Full flight  Direct to customer

Increase  Customer configuration marketing campaigns
Satisfaction Rate Satisfaction  98%  Effective Customer loyalty
Rates Satisfaction program
On-time Lowest  FAA On Time rate  Effective Communication
flights Prices Arrival Rating  First in System
Industry  Quality Management
INTERNAL
 On Ground  <25 min  Cycle time optimization
Improve
Time program
Turnaround
Time  95%
 On-Time
Departure
LEARNING
 % Ground crew  70%  Stock ownership plan
Crew stockholders
ownership and  98%  Ground crew training
training plan  % Ground crew
trained
Exhibit 1. Balance Scorecard
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III. Market Research
Spirit Airlines currently operates more than 385 daily flights to 56 destinations in the
United States, Caribbean and Latin America. Its ultra-low-cost carrier (ULCC) business model,
allows it to compete principally by offering customers its Bare Fares (Non-ticket revenue), which
are unbundled base fares that remove components traditionally included in the price of an airline
ticket, giving customers Frill Control, which provides customer the freedom to save by paying
only for the options they choose such as bags, advance seat assignments and refreshments.
3.1 The Airline Industry
The airline industry exists in an intensely competitive market. For many years, the airline
industry was at least partly government owned, but now, at least in the U.S. all major airlines
have come to be privately held. The airline industry can be separated into four categories by the
U.S. Department of Transportation (DOT): International - 130 + seat planes that have the ability
to take passengers just about anywhere in the world. Companies in this category typically have
annual revenue of $1 billion or more. National - Usually these airlines seat 100-150 people and
have revenues between $100 million and $1 billion. Regional - Companies with revenues less
than $100 million that focus on short-haul flights. Cargo - These are airlines that generally
transport goods. (Investopedia, 2016)
Two recessions, terrorism, high oil prices, intense competition, financial restructurings,
and consolidation have transformed the airline industry over the last ten years. Battling profit
margins near zero, averaging just 0.3%, air carriers have been forced to fine-tune business
models with an aim of minimizing losses through lowering operating costs, eliminating
unprofitable routes, and grounding older, less efficient aircraft. (Jenkins, Mark, & Miller, 2011).
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“The airline industry is heavily influenced by the price and availability of aircraft fuel.
Continued volatility in fuel costs or significant disruptions in the supply of fuel, including
hurricanes and other events affecting the Gulf Coast in particular, could materially adversely
affect our business, results of operations and financial condition”. (Form 10K, 2016)
Ultra-Low Cost Carriers (ULCCs)
The emergence of the so-called ultra-low cost carrier (ULCC) business model was first
developed in Europe by Ryanair and more recently introduced in the U.S. by Spirit Airlines. The
ULCC business model strives to obtain a competitive advantage through a more aggressive
implementation of Porter's cost focus strategy compared to traditional Low Cost Carriers (LCCs).
While mainline carriers have struggled due to the Industry conditions and risk factors, LCCs have
experienced success. While the low LCCs have generally continued to expand in the new
millennium, the domestic airline product offered by the full-service and LCCs has converged to
the extent that many passengers view the domestic economy class seat as a commodity (Tarry,
2010).
Airline Industry Trends
The Global Airline Industry is rapidly expanding and growing, but robust profitability is
still elusive. “Measured by revenue, the industry has doubled over the past decade, from US$369
billion in 2004 to a projected $746 billion in 2014, according to the International Air Transport
Association (IATA)” (Strategy&, 2015). Much of that growth has been driven by low-cost
carriers (LCCs) such as Spirit Airlines or Southwest, which now control some 25% of the
worldwide market and which have been expanding rapidly in emerging markets and unserved
destinations.
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Risk Factors in the Airline Industry
The airline industry is particularly sensitive to changes in economic, environmental,
social, political and legal conditions, impacting to some extend Spirit’s Business Model, results
of operations and financial condition. In general, the industry is affected by conditions, including,
among others:
 Price and availability of aircraft fuel including continued volatility in fuel costs;
 Increased competition and threats of new entrants to the industry;
 Air traffic congestion at airport;
 Air traffic control inefficiencies;
 Adverse weather conditions, such as hurricanes or blizzards;
 Increased security measures;
 New travel related taxes or the outbreak of disease;
 Severity and duration of any downturn in the U.S. or global economy and financial
markets;
 Burdensome consumer protection regulations and laws;
 Higher levels of unemployment and varying levels of disposable or discretionary
income;
 Depressed housing and stock market prices;
 Lower levels of actual or perceived consumer confidence;
 Changes in consumer preferences, perceptions, spending patterns or demographic
trends, including any increased preference for higher-fare carriers offering higher
amenity levels, and reduced preferences for low-fare carriers offering more basic
transportation, during better economic times.
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3.2 Competition
There are three main types of airlines, with the four Major Carriers dominating about
67% of the total market share. Major Carriers also offer full service to customers without the
extra charges.
Examples Description Distinguishing Market Share

Factors (per airline)
Full service airlines that
usually have multiple Hubs
Major hubs and destinations to Large market
Airline all 50 states. These share Higher 14% - 20%
airlines have high fares prices All-
that include baggage, inclusive pricing
food, and other costs.
Low cost carriers focus
on providing cheap
flights to most states. Low cost tickets
Low Cost These airlines use Homogenous
Carrier homogenous aircrafts fleets No hub and 1% - 5%
and no frills ticket spoke No frills
pricing structure to pricing
eliminate unnecessary
costs.
Regional Airlines only
service a specific Centered to
geographic area within region Can
Regional the United States. These operate as part of Less than 2%
Airline airlines are usually larger airline
small and sometimes Small aircrafts
operate for a major
airline.
Exhibit 2. Airline Industry Organization
Spirit Airlines, as part of the Low Cost Carrier category, is mainly focused on expanding
its market share and current routes by establishing agreements or studying unserved markets
where the company can compete. Facing 30% growth in 2015 and an additional forecast for 20%
growth in 2016, the ultra-low cost carrier is rapidly outgrowing its current corporate
headquarters.
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Competition Analysis
The airline industry is highly competitive. The principal competitive factors in the airline
industry are fare pricing, total price, flight schedules, aircraft type, passenger amenities, number
of routes served from a city, customer service, safety record and reputation, code-sharing
relationships and frequent flier programs and redemption opportunities. Spirit’s main competitors
and potential competitors include traditional network airlines, other low-cost carriers and
ULCCs, and regional airlines. The Company typically competes in markets served by traditional
network airlines, and other low-cost carriers and ULCCs, and, to a lesser extent, regional airlines.
Exhibit 3. Industry Rivalry Analysis
“As of December 31, 2015, our top two largest network overlaps are with Southwest
Airlines and American Airlines at approximately 55% and 50% of our markets, respectively. Our
principal competitors on domestic routes are Southwest Airlines, American Airlines, United
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Airlines and Delta Air Lines. Our principal competitors for service from South Florida to our
markets in the Caribbean and Latin America are American Airlines, through its hub in Miami,
and JetBlue Airways and Southwest Airlines, through their operations in Fort Lauderdale” (Form
10K, 2016).
As shown in Exhibit 3, the industry leader at this moment is American Airlines after its
merger with U.S Airways holding a 20% of the market share. However, Spirit Airlines holding
3% of the market share is rapidly expanding, surpassing companies such as SkyWest and
Frontier Airlines. There are four major players in the market, three full service airlines and one
LCC:
American Airlines Delta Airlines Inc. United Continental Southwest Airlines

Group, Inc Holdings, Inc Co.
Market Share: 19.9% Market Share: 17.0% Market Share: 14.7% Market Share: 18.2%
Includes: American Includes: Delta Includes: United Includes: Southwest
Airlines, US Airways, Continental Holdings, Airlines and AirTran
American Eagle Inc
Relevant Hubs: DFW, Relevant Hubs: ATL, Relevant Hubs: ORD, Relevant Hubs: DAL
LGA, JFK, LAX LGA, JFK, LAX EWR, SFO, LAX
Based in Fort Worth, Based in Atlanta, Based in Chicago, Based in Dallas,
Texas, American Georgia, Delta is one of Illinois, U. Airlines Texas, Southwest
Airlines is the largest the world’s largest became one of the Airlines is the largest
domestic airline by airlines. It has a strong world’s largest airlines low-cost carrier in the
market share. It has a geographic focus in the by revenue after its United States. While
strong geographic Midwest, with hubs in merger with Continental. it is still considered a
presence in southern Cincinnati, Detroit, The airline has a strong low-cost carrier, it has
states with hubs in Minneapolis, Salt Lake presence on the east operations similar to
Phoenix, Charlotte, City, as well as New coast as well as the west full service carriers.
Dallas, Miami, as well York City and Los coast with hubs in New The carrier only uses
as New York City and Angeles. Your City, Washington one type of aircraft
Los Angeles. D.C., San Francisco, and and services 41 states.
Los Angeles
Exhibit 4. Airline Industry’s Mayor Market Players
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Exhibit 5. Airline Industry Market Share
New Route Competition and Market Analysis
One of the main competitors for Spirit Airlines in this new expansion strategy to the
Ecuadorian Market is Jet Blue Airways. Jet Blue started on February 2016 to fly between Fort
Lauderdale – Hollywood (FLL) and Quito, Ecuador (UIO) – with its 128 - 150-seat Airbus A320,
operating daily non-stop flights between FLL – UIO. A round trip ticket on JetBlue between FLL
and UIO currently cost about US $270 for travel in late January 2017, which competes strongly
with the fares TAME as the Ecuadorian national carrier offers, at around US $450, operating 3
weekly flights with its A319 airbus transporting around 128 passengers, with one stop in the city
of Guayaquil. These two carriers are the main competitors for Spirit Airlines from the FLL hub,
however Spirit, with its Ultra Low Cost Business Model and its current and future fleet A321ceo
and A321neo can boost and strongly compete in lower fares. With an increased capacity on its
fleet of around 250 passengers per flight in its high density seats, long range which allows gas
cost savings per flight, its third party cost saving strategy of outsourcing most of its operational
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services, and being able to offer promotions and great deal for an even more demanding
Ecuadorian Market, constantly looking for lower fares in order to travel to and from Quito; Spirit
can easily enter and compete with this new and very attractive route that will bring great benefits
for the Company.
On the other side, Spirit has an in-direct competition form the Miami International
Airport (MIA). The only airline that offers non-stop flights from MIA airport is American
Airlines, with a round-trip cost of around US $700, and a max passenger fleet of 277 passengers
with its A777 aircraft. This route is also served by other carriers, most of them members of One
World Alliance. LATAM offers connecting flights such as 2 flights arriving from MIA (here the
company serves as the marketing carrier and the flight is operated by a member of One World
Alliance such as American Airlines), 2 arriving from Lima International Airport, and 6 in
connection with GYE (Guayaquil International Airport). This strategy allows the company to
offer the customers one and two stop flights at low prices depending on the connections and the
layover time. Most of the potential customers surveyed said they travel the most with LATAM
because of the low fares they can offer, giving little attention to the layover which sometimes can
be up to 26 hours.
Another big carrier serving the Ecuadorian Market from MIA international airport is
Avianca, offering 1 connecting flight from El Salvador and 4 connecting flights with stop in
Bogota, with an average price of US $465. United Airlines offers 1 connecting flight from
Houston (which is operated by United), and 9 flights in alliance with One World Alliance
members such as (5 flights from Panama operated by Copa Airlines, 3 flights from Bogota with
Avianca and 1 from Caracas with Tame Airlines). Aeromexico also offer one connecting flight
arriving from Mexico City, and Copa Airlines offers 10 daily flights departing from MIA with
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stop in Panama City, arriving 4 of them to Quito Ecuador. Delta Airlines offers 1 and 2 stop
flights to get to Quito with its main connecting hub at Atlanta, GA, with 1 flight arriving from
Atlanta to Quito.
In average, and excluding Jet Blue Airways, a flight ticket with the current carriers
serving this route is around US $500. Jet Blue is considerably below this average and can
represent a challenge for Spirit when serving this route, but it doesn´t have the advance and latest
equipment Spirit has which allows it to transport a higher amount of passengers and therefore
getting more revenue per available seat mile (RASM), and therefore lowering the cost per
available seat mile (CASM), increasing considerably its operating profitability and boosting the
South American Market.
The exhibits below show the different flight options, hours of operations, lowest average
price and aircraft features of every airline serving the Ecuadorian Market from MIA International
Airport and FLL International Airport.
24
Exhibit 6. Fort Lauderdale Airport Main Airlines serving Ecuador
COMPETITION FOR THE ECUADORIAN MARKET – FLL HOLLYWOOD INTERNATIONAL AIRPORT

Company # and Schedules Aircraft # of Lowest Total
Name Destination frequency # of stops DEP ARV Features Passengers Average Trip # of fights
of flights Price Time arriving to
Roundtrip Ecuador
QUITO 4 Daily 1 stop DFW 7:00 am 11:15 pm A737 / A319 160 / 128 16h 15m
(UIO) flights 9:00 am US $705 14h 15m
11:36 am 11h 39m
1:17 pm 9h 58m
QUITO 9 Daily 2 stops 6:10am (2) 8:11 pm A321 / A757 128 / 176 14h 1m
(UIO) flights CLT / MIA 6:10am (3) 10:13 pm A321 / A319 128 / 128 16h 3m
8:05am (1) 8:11 pm A321 / A757 128 / 176 US $ 705 12h 6m
8:05am (2) 10:13 pm A321 / A757 128 / 176 14h 8m
10:17am (1) 10:13 pm A321 / A757 128 / 176 11h 56m
American QUITO 6 Daily 2 stops 6:10am (3) 11:15pm A321 / A319 128 / 128 17h 5m
Airlines (UIO) flights CLT/DFW 8:05am (2) 11:15pm A321 / A319 128 / 128 US $ 705 12h 58m 1 DFT
10:17am (1) 11:15pm A321 / A319 128 / 128 15h 10m 2 MIA
QUITO 1 Daily 2 stops 6:34 am 10:13 pm A737 / A757 160 / 176 US $ 705 15h 39m
(UIO) flight ORD / MIA
QUITO 3 Daily 2 stops 7:00 am 8:11 pm A320 / A757 128 / 176 US $ 705 13h 11m
(UIO) flight PHL / MIA 7:00 am (2) 10:13 pm A320 / A757 128 / 176 15h 11m
QUITO 6 Daily 2 stops 7:00 am (1) 8:11 pm A737 / A757 13h 11m
(UIO) flights DFW / MIA 7:00 am (3) 10:13 pm A737 / A757 160 / 176 US $ 705 15h 13m
9:00 am (2) 10:13 pm A737 / A757 13h 13m
QUITO 2 Daily 2 stops 8:15 am (2) 10:13 pm A319 / A757 128 / 176 US $ 705 13h 58m
(UIO) flights DCA / MIA
JetBlue QUITO 1 Daily 0 7:24 pm 11:52 pm A 320 128 US $ 268 4h 28m 1
Airways (UIO) flight
TAME QUITO 3 flights per 1 stop GYE 09:00 am 16:05 pm A 320 128 US $ 426 5h 5m 1
(UIO) week
Source: Created by Yesenia Alvarez, 2016
25
Exhibit 7. Miami International Airport Main Airlines serving Ecuador
COMPETITION FOR THE ECUADORIAN MARKET – MIA INTERNATIONAL AIRPORT
Company # and Schedules Aircraft # of Lowest Av. Total Trip # of flights

Name Destination frequency # of DEP ARV Features Passengers Price Time arriving to
of flights stops Roundtrip Ecuador
QUITO (UIO) 1 Daily 0 9:59 am 1:13 pm A 757 176 US $ 502 4h 13m
flight
QUITO (UIO) 1 Daily 0 6:14 pm 9:22 pm A 757 176 US $ 502 3h 8m
American flight
Airlines 5:35am, A 737 160 18h 20m 2 MIA
QUITO (UIO) 5 Daily 1 stop 7:05am, A 777 260 16h 10m 1 DFW
flights DFW 9:20am, 11:15 pm A 767 218 US $ 502 13h 35m
11:05am, A 319 128 12h 10m
12:15pm A 767 218 11 h
QUITO (UIO) 1 Daily 0
flight One 16:00 pm 20:11 pm A 757 176 US $ 483 4h 11m
World
Alliance
QUITO (UIO) 1 Daily 0 18:00 pm 22:13 pm A 757 176 US $ 483 4h 13m
flight One
World
Alliance
LATAM QUITO (UIO) 3 Daily 1 stop 16:40 pm 02:35 am A 767/319 218/128 US $ 483 9h55m 2 MIA
Airlines flight LIM 01:00 am 11:10 pm 10h10m 2 LIM
23:05 pm 11:10 pm 12h5m 6 GYE
QUITO (UIO) 1 Daily 2 stop 20:30 pm 11:10 pm A 787/319 250/128 US $ 483 14h14m
flight BOG
/LIM
QUITO (UIO) 7 Daily 2 stop 01:00 am 18:00 pm A 767/319 218/319 US $ 483 17h
flights LIM 23:05 pm 17:10 pm 18h5m
/GYE 23:05 pm 18:00 pm 18h55m
01:00 am 20:30 pm 19h30m
23:05 pm 18:35 pm 19h30m
01:00 am 22:40 pm 21h40m
23:05 pm 01:05 am 26h
26
QUITO (UIO) 1 Daily 1 stop 17:10 pm 00:01 am A 319 128 US $ 465 6h 51m
Avianca flights SAL
4 Daily 1 stop 17:23 pm 00:25 am A 319 128 US $ 465 7h 2m 1 SAL
QUITO (UIO) flights BOG 08:39 am 15:57 pm 7h 18m 4 BOG
02:12 am 10:00 am 7h 48m
08:39 am 22:00 pm 13h 21m
Aeromexico 3 Daily 1 stop 2:27 pm 6:54 am A 737 160 US $ 454 16h27m 1 MEX
QUITO (UIO) flights MEX 3:04 pm 15h50m
5:12 pm 13h42m
3 Daily 1 stop 6:05 am 11:59 pm A 737 160 US $720 18 h 1 IAH
flights IAH 11:25 am 12h34m
United 3:05 am 20h54m
Airlines QUITO (UIO) United offers connecting flights as follow: A 737 for 160 US $ 720
 5 flights arriving from Panama (operated by Copa Airlines) passengers
 3 flights arriving from Bogota (operated by Avianca)
 1 flight arriving from Caracas (operated by TAME)
Delta Airlines offers 1 and 2 stop flights to get to Quito with its main connecting hub at Atlanta, GA 1 ATL
Delta  1 flight from Miami – Atlanta - Quito
Airlines  3 flights from Miami – Detroit – Atlanta – Quito Boeing 737 for
QUITO (UIO)  3 flights from Miami – LaGuardia – Atlanta – Quito 160 passengers
 1 flight from Miami – JFK –Atlanta – Quito
 3 flights from Miami – Minneapolis – Atlanta –Quito US $ 714
 1 flight from Miami – Southlake City – Quito
Copa 4 PTY
Airlines QUITO (UIO)
Copa Airlines offers 10 daily flights with stop in Panama City with a total of 4 flights arriving to Quito Boeing 737
Us $ 487
Source: Created by Yesenia Alvarez, 2016
27
3.3. Target Market
Spirit's target market is narrowly focused on leisure and visiting mends and relatives
(VFR) passenger segments. Leisure is the primary domestic segment with VFR second.
Internationally, these segments are reversed with VFR first followed by leisure. The product is
carefully tailored for these price-sensitive travelers who are willing to sacrifice product amenities
for a lower price. Spirit is disciplined in maintaining its focused market and unlike all other
domestic earners except Allegtant Air, does not actively target business and corporate travelers
reasoning that its low frequency, limited routes, reimbursement policy, and lack of airport and
onboard amenities have very limited appeal to the business segment so prized by other earners
(Spirit Airlines, 2016). Spirit Airlines is a major travel brand that is approaching the millennial
audience in a completely different way than any other airline brand has in the past and it is
working. This target market is willing to sacrifice comfort to get a great fare.
The Ecuadorian Market
Exhibit 8. Ecuadorian-origin population in the U.S. 2013

Source: Pew Research Center tabulations of 1990 and 2000 censuses (5%
IPIMS) and 2001 – 2013 American Community Surveys (1% IPIMS). 28
An estimated 687,000 Hispanics of Ecuadorian origin resided in the United States in
2013, according to a Pew Research Center analysis of the Census Bureau’s American
Community Survey. Ecuadorians are the 10th largest population of Hispanic origin living in the
United States, accounting for 1.3% of the U.S. Hispanic population in 2013 (Pew Research
Center, 2013). Since 1990, the Ecuadorian-origin population has more than tripled, growing from
186,000 to 687,000 over the period. At the same time, the foreign-born population of Ecuadorian
origin living in the U.S. grew by 203%, up from 137,000 in 1990 to 417,000 in 2013. In
comparison, Mexicans, the nation’s largest Hispanic origin group, constituted 34.6 million, or
64.1%, of the Hispanic population in 2013. This study also reflects some of the main facts about
the Ecuadorians Living in the U.S. which can be very useful for Spirit Airlines in order to
understanding the market composition and demographics of its future target market with the
Ecuadorian route, such as:
Immigration status: About six-in-ten Ecuadorians (61%) in the United States are foreign
born, compared with 35% of Hispanics and 13% of the U.S. population overall. About one-third
of immigrants from Ecuador (35%) have been in the U.S. for over 20 years. About four-in-ten
Ecuadorian immigrants (42%) are U.S. citizens.
Language: More than half of Ecuadorians ages 5 and older (55%) speak English
proficiently. The other 45% of Ecuadorians report speaking English less than very well,
compared with 32% of all Hispanics. In addition, 87% of Ecuadorians ages 5 and older speak
Spanish at home.
Age: Ecuadorians are younger than the U.S. population but older than Hispanics overall.
The median age of Ecuadorians is 32; the median ages of the U.S. population and all Hispanics
29
are 37 and 28, respectively. Among Ecuadorians, the median age of immigrants is 41 years, while
it’s only 13 years among the U.S. born.
Marital status: Ecuadorians ages 18 and older are married at a slightly higher rate (51%)
than Hispanics overall (46%) and about the same rate as the U.S. population overall (50%).
Among Ecuadorians ages 18 and older, the foreign born are twice as likely to be married as those
who are U.S. born—57% vs. 29%.
Fertility: Some 6% of Ecuadorian women ages 15 to 44 gave birth in the 12 months prior
to this survey. That was similar to the rate for all Hispanic women (7%) and the same as the
overall rate for U.S. women.
Regional dispersion: Two-thirds of Ecuadorians (66%) live in the Northeast, and four-in-
ten live in New York.
Educational attainment: Ecuadorians have higher levels of education than the U.S.
Hispanic population but lower levels than the U.S. population overall. Some 19% of Ecuadorians
ages 25 and older—compared with 14% of all U.S. Hispanics and 30% among the entire U.S.
population—have obtained at least a bachelor’s degree. Among Ecuadorians ages 25 and older,
the U.S. born are more likely to have earned a bachelor’s degree or more than foreign-born
Ecuadorians—35% vs. 16%.
Income: The median annual personal earnings for Ecuadorians ages 16 and older was
$24,000 in the year prior to the survey—higher than the median earnings for all U.S. Hispanics
($21,900) but lower than the median earnings for the U.S. population ($30,000).
Poverty status: The share of Ecuadorians who live in poverty, 19%, is higher than the rate
for the general U.S. population (16%) and lower than the rate for Hispanics overall (25%).
30
Health insurance: About three-in-ten Ecuadorians (31%) do not have health insurance,
compared with 29% of all Hispanics and 15% of the general U.S. population. One-in-ten
Homeownership: The rate of Ecuadorian homeownership (39%) is lower than the rate for
all Hispanics (45%) and the U.S. population (64%) as a whole.
Exhibit 9. U.S Population, by Ethnicity and Ecuadorian Origin
2013
31
Potential of the New Market and Purchasing trends
This new route would increase the number of passenger served by Spirit Airlines in a
daily basis and therefore revenue and profit. The Ecuadorian market represents a very interesting
destination, not only for the amount of people from Ecuadorian origin living in the U.S, but also
because of its culture and purchasing trends. For this matter, a survey of 50 potential customers
and its trends was made in the Fort Lauderdale and Miami International Airports, in order to
further study and determine the main factors that drive customer´s purchasing trends and
preferences.
Exhibit 10. Purchasing trends for the Ecuadorian Market
32
After analyzing 50 potential customers that were traveling to Quito in other airlines such
as JetBlue Airways and TAME Airlines from Fort Lauderdale Airport and LATAM, Avianca and
American Airlines from Miami International Airport, 80% of them from Latin American origin,
one of the main trends that were observed is related with Price. 80% of the potential customer
surveyed expressed that when they look for a flight the main reason they choose from one airline
and another is the price. The lower the price, the higher the possibility to buy it, not only one
time, but at least 2 or 3 times a year. As well, 80% of them said they travel often to Ecuador, and
that if there would be more promotions and offers they would travel more often, because 70% of
them had relatives and friends in Ecuador to visit. Which is another interesting fact because,
according to them, their relatives would travel more often from Quito to Miami if the price were
lower. They prefer price over comfort or in-flight services, being very price sensitive.
Another interesting fact was that when asked about the average price, 60% said they have
paid between $250 and $450 dollars for a roundtrip flight ticket, mainly in airlines like LATAM,
Avianca and now with JetBlue that is boosting the market with its low fares.
33
This represents a very good opportunity for Spirit Airlines to offer the service to Ecuador
from the Fort Lauderdale Airport, serving more than 10,000 Ecuadorians that live in Broward
County, and taking advantage of its positioning in its main hub, with the possibility to offer
initially one daily flight and furthermore, with more market research and development, the
possibility to expand the service directly to Guayaquil International Airport. Spirit has a very big
advantage because of its possibility to lower costs and uses its new A321 and A321neo fleet that
gives the possibility to the company to get more revenue by transporting more passenger that its
competitors with a longer range and performance.
Fuel Prices and Ecuadorian Economy
Historically, Ecuador has been one of the South American Countries with the lowest gas
price per liter. Compared with the international average price of oil per liter of 1.00 (U.S Dollar),
Gas price in Ecuador is 0.39 (U.S Dollar) as of October 2016, being at least 61% below
international average price. After Venezuela with an oil price of 0.01 (U.S Dollar) per liter,
Ecuador is the second South American country with the lowest rate, and in an international scale,
Ecuador is in the 6th place with the better oil prices, being surpassed for Venezuela, Saudi
Arabia, Turkmenistan, Argelia and Kuwait. (Global Petrol Prices, 2016). This situation
represents an opportunity for the Airline Industry in order to lower costs and getting more
revenue per flight operated, however the decrease in the oil prices is being affecting the
Ecuadorian Economy. “This is a big problem for Ecuador because 50 percent of its exports and
30 percent of its government revenues come from oil” (Rocco, 2016). Ecuador is
substantially dependent on its petroleum resources, which have accounted for more than half of
the country's export earnings and approximately 25% of public sector revenues in recent years
(CIA, 2016).
34
As of December 31, 2015, the company had a single fuel service contract with World
Fuel Services Corporation to manage the sourcing and contracting of its fuel supply. By
considering this new route, Spirit can consider to work with them and get better prices, in order
to fulfill its low cost strategy.
3.4 Marketing Strategy
Currently, Spirit Airlines has improved its marketing strategies to attract and retain
customers. Some years ago, Spirit Airlines launched and deployed a crude marketing campaign
where it targeted a specific demographic and used tag-lines referring to controversial current
events. This campaign caused numeral complains about the company and affected Spirit Airlines
reputation amongst its competitors for being unprofessional. The crude advertising has affected
Spirit’s customer base. Customer sensitive to the content of these advertisements have gone so
far to boycott the airline, publicly speak out against the company and complain to the FAA
(Bachman, 2014).
Because of the company non-ticket services and ancillary fees, this campaign affected
negatively Spirit’s Airlines strategic position by enhancing the company’s bad image and
reputation. For this reason, in 2014 Spirit Airlines launched a “State of the Hate” campaign,
showing what customer “hate” about airlines, about Spirit and how the Company helps to save
money by offering extremely cheap flights to many destinations. Spirit has used the results of the
State of the Hate to improve its reputation, however, still the videos may appear offensive to
some of the customers. The report noted the top five consumer complaints included seats on
aircraft, lost baggage, delays, service, and fees.
Currently Spirit is more conscious about its image and reputation and is working in
providing customers the proper and accurate information they need in order to purchase a flight
35
ticket and use their Frill Control Power. However, the Company’s marketing efforts are still
minor compared to other airlines, and this may be related with the Company’s strategy of keeping
costs as low as possible in order to offer the best fares of the market.
New Strategy Marketing Campaign
Spirit Airlines will advertise this new route on its website, adding the new destination and
special offers. On the other hand, it is very important that the company launch posters and in-
flight advertising showing the new routes to current customers, as well as developing informative
videos and advertising campaigns in magazines, social media and television with the unbundled
ultra-low prices offered with this new agreement. Spirit can also take advantage of the Social
Media to advertise this new route, in order to get to a higher number of potential customer. It also
can enhance and reinforce its current agreement with travel agencies to promote this new route
with great offers.
IV. Product/Service
4.1 Current Product Strategy
Product and Fare Structure
Spirit Airlines Inc, offers low fares flights based on the ultimate unbundled pricing
strategy. This strategy consists and a fare that buys a seat with allowance for under-seat baggage
only (one personal item). All other amenities, including checked and overhead carry-on baggage
are additional and can be purchased for an additional fee. “Our fares are fully unbundled. A ticket
with us gets you and a personal item from A to B. We call this the Bare Fare. Additional charges
for baggage, advance seat assignments and any changes apply only if you add these options.
Fares listed are per person, are non-refundable and include all taxes and fees.” (Spirit Airlines,
36
2016). Exhibit 11 shows the flight price composition including Base Fare and Government’s
Cuts. The company offers “Frill Control” which means that the customer only pay for what they
use giving them control of what options to add in their Bare Fare. Exhibit 12 shows the optional
services structure that is not included in the Bare Fare.
Exhibit 11. Flight Price Composition
Base Fare $ XXX.XX

Flight $ xxx.xx
Unintended Consequences of DOT Regulations $ xxx.xx
Passenger Usage Fee $ xxx.xx
Government’s Cut $ XXX.XX
Security Fee $ xxx.xx
Passenger Facility Fee $ xxx.xx
Segment Fee $ xxx.xx
Federal Excise Tax $ xxx.xx
Total Due (Base Fare + Government Cuts) $ XXX.XX
Exhibit 12. Optional Services Structure
BAGS
One personal item with a Bare Fare Included
OVERWEIGHT OR OVERSIZED BAGGAGE
41 – 50 Lbs (18 – 23 kg) +$30 per bag
51 – 70 Lbs (23 – 32kg) + $55 per bag
71 – 100 Lbs (32-45 kg) + $100 per bag
63-80 linear inches (158-203 cm) + $100 per bag
Specia items over 80 linear inches (203cm) + $150 per item
SPORTING EQUIPMENT
Bicycle $75 each way
Surf Board (Maximum of 2 surfboard in one bag) $100 each way
Golf Clubs Same as checked bags, overweight charges may
apply
Skis/Snowboards Same as checked bags, overweight charges may
apply
SEATS
Spirit Assigned Seating at Check In Free
Customer-Requested Seat Assignments / Regular $1 to $50 per seat
37
Seats
Big Front Seats (in advance) $12 to $199 per seat
Big Front Seats (onboard upgrades depending on $25 to $75
flight length)
MEMBERSHIPS
FREE SPIRIT Membership Free
$9 Fare Club Trial Membership (60 days trial) $19.95 per member
$9 Fare Club Annual Membership $59.95 per member
$9 Fare Club Annual Renewal $69.95 per member
OTHER
Boarding pass printed at home Free
Boarding pass printed by Airport Kiosk $2 per boarding pass printed
Boarding pass printed at Airport Agent $10 per boarding pass printed
Unaccompanied Minors (Price includes snack and $100 per customer, each way
beverage)
Infant (Lad Child) Free (taxes may apply for certain countries
Pet Transportation (Limit 4 pets total in cabin) $110 per pet container, each way
Travel Guard Insurance/Domestic Itinerary 5% of total reservation price ($14 minimum)
Travel Guard Insurance/International Itinerary 5.5% of total reservation price ($16 minimum)
Travel Guard Insurance/Vacation Package Itinerary 6.5% of total package price ($25 minimum)
ONBOARD SNACKS AND DRINKS

Snacks $1 to $10
Drinks $1 to $15
BOOKING RELATED
Reservation Center Booking (including packages) $35 per booking per customer
Group Booking $5 per booking per customer
Colombia Administrative Charge $15 to $95 per booking per customer
Standby for Earlier Flight $99 each way per customer
Passenger Usage Charge $8.99 to $17.99 each way per customer
Unintended Consequences of DOT Regulations $2 each way per customer
Charge
FREE SPIRIT AWARD BOOKING
Agent Transaction – Reservation Center $35 per customer, per booking
Award Redemption Free to $100 per customer, per booking
Award Modification $110 per customer, per booking
Mileage Redeposit $110 per customer, per booking
MODIFICATION OR CANCELLATION
Web Modification or Cancellation $90 per customer, per booking
Reservations / Airport Modification or Cancellation $100 per customer, per booking
Group Booking Itinerary Modification or $50 per customer, per booking
Cancellation
EXTRAS
Flight Flex $35 to $45 per customer
Shortcut Boarding $5.99 each way per customer
GreenUP $1 - $5 per customer
38
Third Party Service Providers
Spirit have entered into agreements with third party service providers to furnish certain
facilities and services required for its operations, including ground handling, catering, passenger
handling, engineering, maintenance, refueling, reservations and airport facilities as well as
administrative and support services. Spirit is likely to enter into similar service agreements in
new markets it decides to enter, and there can be no assurance that we will be able to obtain the
necessary services at acceptable rates.
Current Route Structure
As of December 31, 2015, Spirit’s route network included 191 markets served by 56
airports throughout North America, Central America, South America and the Caribbean. “Our
network expansion targets underserved and/or overpriced markets. We employ a rigorous process
to identify opportunities to deploy new aircraft where we believe they will be most profitable. To
monitor the profitability of each route, we analyze weekly and monthly profitability reports as
well as near term forecasting” (Spirit Airlines, 2016). Fort Lauderdale serves as a directional hub
with morning southbound flights from Northeastern and Midwest states connecting to many
Caribbean, Central and South American destinations. Flows are reserved in the
afternoon/evening and random connections are always available to ensure customers get to their
destinations with the lowest price possible and in the timeframe scheduled. Below is a route map
of our current network, which includes seasonal routes and routes, announced as of February 8,
2016 for which service has not yet started:
39
Exhibit 13. Spirit AirlinesRoute Map 2016
* Ecuadorian Market currently

unserved
40
Exhibit 14. Spirit Airlines main destinations divided by regions.
SPIRIT AIRLINES, INC - MAIN DESTINATIONS 2016
NORTH AMERICA CENTRO AMERICA CARIBBEAN
Aguadilla, Puerto Rico Montreal, Canada Cabo San Lucas, Mexico Aruba, Aruba
Akron/Canton, OH Myrtle Beach, SC Cancun, Mexico Havana, Cuba
Atlanta, GA New Orleans, LA Guatemala, Guatemala Kingston, Jamaica
Atlantic City, NJ New York, NY Los Cabos, Mexico Montego Bay, Jamaica
Baltimore/Washington Newark, NJ Managua, Nicaragua Port-au-Prince, Haiti
Boston, MA Niagara Falls, NY Panama City, Panama Punta Cana, Dominican
Republic
Buffalo, NY Oakland, CA San Jose del Cabo, Santiago, Dominican
Mexico Republic
Charleston, WV Orlando, FL San Jose, Costa Rica St. Maarten, St.
Maarten
Chicago, IL Philadelphia, PA San Pedro Sula,
Honduras
Cleveland, OH Phoenix, AZ San Salvador, El
Salvador
Dallas/Ft. Worth, TX Pittsburgh, NY SOUTH AMERICA
Denver, CO Portland, OR
Detroit, MI San Diego, CA
Fort Lauderdale, FL San Francisco, CA Armenia, Colombia
Fort Myers, FL San Juan, Puerto R Bogotá, Colombia
Houston, TX Seattle-Tacoma, WA Cartagena, Colombia
Kansas City, MO St. Thomas, U.S Lima, Perú
Virgin Islands Medellín, Colombia
Las Vegas, NV Tampa, FL
Latrobe, PA Toronto, Canada
Los Angeles, CA Washington, DC
Miami, FL West Palm Beach, FL
Minneapolis, MN
4.2 Main features of the new Product/Service to offer
The new Ecuadorian Route will be operated by Spirit Airlines using its own equipment
and capacity, and operating from its main Hub at Fort Lauderdale International Airport to
Mariscal Sucre International Airport in Quito Ecuador. The Company currently have a long range
41
fleet, A321 aircraft with all the specifications needed to serve this route, and it also has future
A321neo in order to increase its capacity.
Mariscal Sucre International Airport (Quito, Ecuador)
Fort the matter of this new strategy, flights will be operated from the Fort Lauderdale Hub
to Mariscal Sucre International Airport in Quito Ecuador. The main Airport of Ecuador began to
operate in 2013 as the only Greenfield airport in Latin America and the Caribbean, allowing a
significant increase in connectivity for Quito and the Country, and at the same time offering more
efficient operations for airlines and improved services for passengers (Mariscal Sucre
International Airport, 2016).
Location: The airport is located on the Caraburo plateau with an area of 1,500 hectares
and a distance of 20.5 kilometers from the downtown of the city of Quito, being currently served
by three major roads in excellent condition with allows free-flowing traffic between the airport
and the City.
Climate: Temperature ranges from 42 to 79 Fahrenheit Degrees and it does not rain
frequently, making it an appropriate environment for aviation operations.
Operating Time: The airport maintains an average operating time of 99.5%.
Passenger Terminal: The terminal measures 52,430 m2 and includes all services and
facilities necessary for the efficient flow of passengers and provides a wide commercial offering
and comfort to ensure that you have the best travel experience as soon as you enter the airport.
Level 1 is for Arrivals. Passengers in International Arrivals arrive through the North door, while
passengers in Domestic Arrivals arrive through the South door. Level 2 is for Departures.
Airlines that operate domestic flights use the check-in counters in hall A and the south side of
42
hall B, while airlines that operate international flights use the counters located on the north side
of hall B and halls C and D.
Elevation: 2,411 MASL (Meters above Sea Level). This increases the operational
efficiency of aircraft that can take off from the Airport with an almost full cargo and fuel
capacity, thus avoiding layovers and saving time and additional costs.
Runway: The Airport has a runway measuring 4,098 m, the longest runway in Ecuador
and Latin America. There is a parallel taxiway the same length as the runway and other shorter
taxiways that allow the quick movement of aircraft and vehicles on the ground.
Aprons: The airport has been built with three large aprons for Passengers, Cargo and
General Aviation which are perfectly separated so that their specific purposes may be performed
without difficulty. The main characteristics are as follows:
Passenger Apron: Stands: 28, Surface: Rigid Pavement, Bearing Capacity:
57/R/A/W/T
Cargo Apron: Stands: 6, Surface: Rigid pavement, Bearing Capacity: 57/R/A/W/T
General Aviation Apron: Stands: 8, Surface: Flexible pavement, Bearing
Capacity: 53/F/A/X/T
Navigation Aids: The airport has all the visual aids required by the International Civil
Aviation Organization (ICAO) and the Ecuadorian Aviation Authority, such as signals, signs,
etc., with an emphasis on PAPI systems for both runways 18 and 36.
As part of the visual aids, the airport has CAT II approach lights for runway 36, which can be
summarized as follows: Lateral bars for the first 270 m of approach lights, Runway Centre line
lights, Runway guard lights, Rapid exit guidance lights, Runway touchdown zone lights, Stop
way lights, Simple approach lights for runway 18.
43
Electronic Aids: The characteristics of the equipment are designed to operate up to Cat. III.
Crews have the following aids to assist their operations at the airport:
 2 VOR/DME, one installed 7.5 NM to the North and the other at 9.7 NM to the South.
 2 ILS/DME, which operate in Cat. I with a projection to Cat. II.
Approach and Take-off Procedures: In accordance with the installed aids, the flight crews are
able to use a series of precision and non-precision approach procedures including VOR/DME,
ILS/DME and RNAV which apply RNP of up to 0.30 and are available to the pilots according to
their qualifications.
Exhibit 15. Quito International Airport Fees
AEROPUERTO INTERNACIONAL MARISCAL SUCRE

UPDATED AIRPORT CHARGES
QUITO, ECUADOR
NAIMS-Q Charges Domestic International
February 20, 2015 – February 19, 2016
Passenger Charges and Fees (US Dollars)
TUT 11.01 49.52
ATC 1.72 1.72
CFR 1.97 1.97
Safety 3.00 3.00
Airlines Charges and Fees (US Dollars)
0 – 49,9 Ton 3.35 15.43
Landing Fees 50 – 99,9 Ton 3.49 16.10
100 – 149,9 Ton 3.63 16.77
>= 150 Ton 3.77 17.44
0 – 49,9 Ton 0.91 4.17
Lighting Fees 50 – 99,9 Ton 0.94 4.35
100 – 149,9 Ton 0.98 4.53
>= 150 Ton 1.02 4.71
0 – 49,9 Ton 0.43 1.96
Parking Fees 50 – 99,9 Ton 0.44 2.04
100 – 149,9 Ton 0.46 2.13
>= 150 Ton 0.48 2.21
From 0 to 45 min 41.68 125.03
Gate From 46 to 180 min 41.68 + 0.46 * (t – 45) 125.03 + 1.39 * (t – 45)
(t= time in min)
More than 180 min 104.19 312.58
Source: Public Company of Metropolitan Airport Services and Management
Of Free Zones And Special Laws, 2016.
44
Aircraft Configurations
By only flying the Airbus A320 family, the company
has a great cost advantage compared with its
competitors in terms of operational performance. As of
December 31, 2015, Spirit had a fleet of 79 Airbus
single aisle aircraft, which are commonly referred to as
“A320 family” aircraft. A320 family aircraft include
the A319, A320 and A321 models, which have broadly
common design and equipment but differ most notably in fuselage length, service range and seat
capacity. As of December 31, 2015, the company´s fleet consisted of 29 A319s, 42 A320s and 8
A321s, and the average age of the fleet was 5.2 years.
For the specific case of the new route to Ecuador, the best option for the Company would
be to utilize its Airbus 321neo. This aircraft has a stretched fuselage with an overall length of
44.51 meters, along with an extended operating range of up to 3,000 nautical miles while
carrying a maximum passenger payload. Like each member in Airbus’ A320 Family of jetliners,
the A321 offers the lowest fuel burn, emissions and noise footprint in its class. With a range of
up to 4,000 nm. /7,400km., the A321 is capable of flying longer routes, for example transatlantic
flights from Europe to U.S East Coast.
The A321 typically accommodates 185 passengers in a two-class configuration (16 in
business class and 169 in economy) – while offering unbeatable economics in high-density
seating (with up to 220 passengers) for charter and low-cost operators. “From 2018, an
optimized use of cabin space, increased exit limits and a new cabin door configuration will
45
enable new standard capacities for the A321neo (new engine option) of 206 in a two-class
configuration and 240 passengers in high-density” (Airbus, 2016).
For the A321neo – which performed its maiden flight in February 2016 – Airbus is
increasing seating capacity with optimized use of cabin space, increased exit limits and a new
cabin door configuration. This “Cabin-Flex” option will increase the jetliner’s maximum
certified capacity to 240 seats, while still accommodating Airbus’ modern comfort standard of at
least 18-inch wide seats.
Exhibit 16. Airbus A321 Main Features
A321 Airbus Specifications

Crew 2 pilots and 4-6 flight attendants
Capacity
1 class 199 (typical configuration), 220 (maximum)
2 classes 185 (typical configuration)
Load 51.73 m3, 10 containers LD3-46
Length 44.5 m (146 ft)
Wingspan 34.1 (111.9 ft)
Height 11.8 m (38.6 ft)
Surface area 122.6 m² (1 319.7 ft²)
Empty weight 48 500 kg (106 894 lb)
Maximum take-off weight 93 500 kg
Maximum weight without fuel 73 800 kg
Power plant 2 × Turbofan Series IAE V2500 or Series CFM International
CFM56-5.
Normal thrust 133-147 kN (30 000-33 000 lbf) thrust each.
Width of cabin 3.7 m
Width of fuselage 3,95 m
Wing angle 25 degrees
Fuel capacity 24 050 liters (standard), 30 030 liters (maximum)
Performance
Maximum operating speed 871 km / h (Mach 0.82) at 11 000 m
(Vno)
Cruising speed (Vc) 828 km / h (Mach 0.78) at 11 000 m
Range 5 600 km (3 024 nmi; 3 480 mi)
Roof of flight 12 000 m (39 370 ft)
Take-off run 2180 at sea level)
46
V. Organizational Design
5.1 Organizational Structure
As an ULCC (Ultra Low Cost Carrier), Spirit Airlines applies its low-cost leadership
strategy through its daily operations, attributable to the following functions: Unbundled base-fare
pricing; Low operating cost; High aircraft utilization; High seat density; and a limited ancillary
portfolio.
The Organizational Structure of Spirit Airlines was constructed and adjusted based on its
Ultra-Low Cost Carrier Strategy and its Operations Profitability Corporate Value that drives all
the company’s operations. The Company handles a Hierarchical Organizational Structure
consisting on a group of power held by the Board of Directors, which defined and adopted the
Corporate Governance Guidelines to serve the interest of the Company and its Stockholders.
Exhibit 17. Spirit’s Organizational Structure
Source: The Official Board, 2016 47

Robert L. Fornaro President Chief Executive Officer, and Class III Director
John Bendoraitis Senior Vice President and Chief Operating Officer
Thomas Canfield Senior Vice President, General Counsel & Secretary
Ted Christie Senior Vice President and Chief Financial Officer
Matt Klein Sr. Vice President and Chief Commercial Officer
These Guidelines acknowledge the leadership exercised by the Board’s standing
committees and their chairs and are intended to serve as a flexible framework within which the
Board may conduct its business and not as a set of legally binding obligations.
As exposed in Exhibit 15, the organizational structure of the company follows a
hierarchical structure based on three levels: the Board level, integrated by the CEO, the Chairman
of the Board of directors and six directors that support the decision making process of the
Company. The Financial, Operations, Sales, Information, Supply Chain & Support, legal, Human
Resources, Network Planning and Marketing are under the management of the CEO. These
levels reflect the wide range of the functional areas of the company that support the main flight
operations. The financial and operations departments play an important role in the company
operations. Financial department handled all the matters concerning investor relations, control
and financial planning & analytics. On the other side, the operation department is responsible for
the deployment of the company’s strategy and main operations, being in charge of the pricing &
revenue, flight operations, inflight experiences and technical operations. This Organizational
Structure shows how broad and open is the company to fulfill its mission of remaining low cost
market leader.
As exposed in Exhibit 18, the Company’s Operations structure follows a downward
communication. All flight operations are monitored by the Manager who reports to the vice
48
president and therefore to the CEO and board of directors. In this case, decision making flows
from the top to the bottom line, making communication sometimes a little bit slow.
Exhibit 18. Spirit’s Operations Chart
Source: Air Transportation, 2015.
Facing 30% growth in 2015 and an additional forecast for 20% growth in 2016, the ultra-
low cost carrier was rapidly outgrowing its current corporate headquarters. Spirit Corporate
employees handle an open-self responsible culture where every employee is responsible for their
space, to keep it clean and no one has assigned parking spaces. As mentioned by the CEO, “We
applied to our corporate space what we do to our airplanes. We densified it up a bit. What Spirit
was able to do was to manage its growth more efficiently without having to buy new
49
administrative space. That was one of the driving factors over the whole thing. We could fit
everyone in the existing building that way” (Spirit Airlines, 2016).
5.2 Decision Making Process
The business and affairs of the Company are managed under the direction of the Board,
including through one or more of its committees as set forth in the bylaws and committee
charters (Bloomberg, n.d.). The Board of Directors is composed by the CEO Robert Fornaro,
1Chairman of the Board and 6 members of the Board of Directors. The Company also has its key
executives that command each department, they are: Chief Financial Officer and Senior Vice
President, Chief Operating Officer and Senior Vice President, Senior Vice President, General
Counsel, and Company Secretary, Chief Commercial Officer and Senior Vice President, Chief
Human Resources Officer and Vice President, Chief Information Officer and Senior Vice
President. These key departments are all under the command of the CEO, and therefore for
decision making regarding strategic points, it has to be under the Board consideration. However,
the company also counts with 4 committees that support the decision making, they are: the Audit
Committee, Compensation Committee and Nominating and Corporate Governance Committee
that are composed entirely of independent directors. As stated above, the decision making
process at Spirit Airlines is very centralized in one specific power group, the Board of Directors.
5.3 Internal Processes
Due to the current Hierarquical Organizational Structure, processes take place with a
downward communication process. All main operational decisions of the Airline come from the
CEO, flowing through the main senior vice presidents and directors of flight operations, who
therefore manage the group of directors of flight operations controlling Flight dispatch, Aircraft
Control, Crew Control, Maintenance Services, Passenger Services, Training, Procedures and
50
Operations. Hence, the organization is designed to handle its operations from a centralized
decision making structure which allows control of all flight operations but can result in delays
on the feedback and communication process with employees due to the bureaucracy managed on
it.
5.4 Means of Communication
Communication with Employees
Due to the hierarchical Organizational Structure of Spirit, downward communication is
more common. However, employees barely can get directly to the top executives without passing
the previous chain of command related to their position in the company. They handle a direct
communication system through their departments (in case of the headquarter employees) and an
intranet portal in case of flight attendants, pilots, counter agents, among others. Although the
Company offices are kind of decentralized in its design, still the communication process is poor
and doesn’t give room for employees to give opinions or purpose ideas. Some of them states that
management is only focused on cutting costs in order to provide low fares due to their operating
profitability corporate value, but what they perceive is that management is also cutting employee
value for not giving importance to some of their needs. Therefore, it seems to be a limited
information sharing from management and an ultra-low cost mentality trickles down to employee
benefits and rewards due to the current organizational structure.
Communication with the Customer
Spirit offers tickets through its call center and airport ticket counters, as well as online
through www.spirit.com; and through various third parties, including online and traditional travel
agents and electronic global distribution systems. If a customer has questions or needs to solve
some inquiries, they can do it through the website in the “Help” Section where there are common
51
questions answered or through the “Customer Support” section, where they can complete a form
and an email will be sent to an expert on the topic in Spirit’s Customer Relations Department.
It'll be answered in the order it was received. Customer can access to the section at
https://customersupport.spirit.com
Communication with the Stakeholders
As a public traded company, Spirit presents its quarterly reports on their Investor
Relations website. Over there, not only investors, but also stakeholders can have access to new
releases, stock performance, financials, and governance and investor resources. Spirit conducts a
Conference Call/Webcast Detail to discuss the quarter results and new updates to the company’s
strategy with the investors and stockholders in an interactive manner, and a live audio webcast of
the conference call is available to the public on a listen-only basis at http://ir.spirit.com. After
each conference, an archive of the webcast is available under Webcasts & Presentations for 60
days. This way, the company ensures that the stakeholders participate and know from the main
source the Company results and strategies.
5.5 Environment and Impact of the Organizational Structure
Spirit Corporate employees handle an open-self responsible culture where every
employee is responsible for their space, to keep it clean and no one has assigned parking spaces.
The company’s strategy to keep cost as low as possible is being applied to its headquarter offices.
Spirit is applying to its corporate space what they do to their airplanes, so in order of keeping
costs low, the company doesn’t invest in new building or new restructured offices, instead they
defined an open-decentralized office field where there’s no formal divisions between
departments although decision making continue to be centralized. However, from the notoriously
52
hierarchal aviation industry the company operates in cubicles in an open floor plan where the
executive offices are very close with other departments.
However, although this structure is supposed to enhance efficiency facilitate better
teamwork, improve morale and contribute to driving lower costs to the bottom line, the
hierarchical organizational decision making structures delays at some point the decentralization
and building of a better environment at the Company. What some employees states is that due to
this structure, it becomes difficult for them to get to the main board of give new ideas, because
they perceive a management that doesn’t pay so much attention to employees but to strategy
itself.
5.6 Motivation Effects
This organizational structure currently held by Spirit may be very effective when
deploying the cost savings and operational profitability strategy for the company, but it is
affecting at some point the employees’ satisfaction rate which is reflecting in the company’s
customer service. Therefore, Spirit should look for building a collaborative and open decentralize
organizational structures that enhances participation and encourages employees to give their best.
5.7 Information and Technology
The company handles its operations through an advanced and effective technology
system. Its internal processes are managed through its intranet where every employee has access.
The company has a very friendly and simple website where customers can find the proper
information for their flights and the unbundled services that are not included in the Bare Fare but
that they are willing to pay using their Frill Control. However, the company only has one phone
line for its headquarters operations, therefore sometimes it can become very difficult to
communicate with the different departments of the Company or schedule an appointment. The
53
services offered through their phone line are related, in most cases, with customers complains,
baggage concerns, customer service and operations.
Exhibit 19. SWOT Analysis
STRENGTHS WEAKNESSES
 Market Leader in Price Competition  Zero Code sharing Agreement with other
 Affordable pricing gives it a cost Airlines to improve and increase service.
advantage  No in-flight entertainment and catering
 Well-known brand in the region services
 Offers loyalty program for customer  Operational across limited destinations
retention  Extra fees for baggage (no baggage
 More seat-size as compared to other low allowance) which causes many customers
cost carriers complains.
 Apart from US it operates in Mexico, Latin  Highly dependent on fuel costs to maintain
America and Caribbean low fares.
 It is increasing its fleet at a rapid speed.
OPPORTUNITIES THREATS
 Positive outlook of US economy  Fuel price increase a threat to low-cost

 Positive outlook of Latin American operations
economy
 Technological advancements can help  Outdated technology compared to big
provide in-flight entertainment cheaply and players
improve the overall experience
 Growing popularity of low fare airline  Service quality leading to loss of customers
travel
 Increasing number of price conscious
customers.
VI. Human Resources
Spirit Airlines is committed in finding the right people, for the right job in the right time.
The company’s strategic management of Human Resources relies on redirecting its short,
54
medium and long-term strategic objectives through a rationalized recruitment, selection, and
training and promotion process. In this sense, the business is labor intensive, with labor costs
representing approximately 23.2%, 19.9% and 19.1% of its total operating costs for 2015, 2014
and 2013, respectively (Form 10K, 2016). “Our talented and diversified workforce is located in
over 50 destinations in eighteen countries, with our team members representing a variety of
nations around the world” (Spirit Airlines, 2016).
The company follows the specific airline regulations in terms of safety, training and
support of its employees. As of December 31, 2015, approximately 73% of Spirit’s employees
were represented by four labor unions. Also by the same date, the Company had a total number
of employees of 4,847 and an average of full-time equivalent basis, for the full year 2015 of
4,326 employees, compared to 3,722 in 2014. Exhibit 15 below sets forth the company’s
employee groups, number of employees and representative of each respectively as of December
2015.
Exhibit 20. Spirit Airlines’ Staff Composition
Employee Groups Representative Number of

Employees
Pilots Air Line Pilots Association, 1,266
International (ALPA)
Flight Attendants Association of Flight Attendants 2,075
(AFA-CWA)
Dispatchers Transport Workers Union (TWU) 35
Mechanics International Association of Machinists 499
Airport Agents/other and Aerospace Workers (IAMAW) 517
Administrative Roles - 455
Total Employees 4,847
55
6.1 Human Resources Management
Recruitment and Hiring Process
Spirit’s recruitment process is made through its online website and through alliances with
employment agencies to redirect its job positions to its website. The company is in constant quest
to find the best people to help it keep winning in this challenging industry. To ensure this, it
assures to include in every Job Description and detail the specific skills and requirements the
candidate has to meet in order to fulfill the vacancy. People can apply online, then complete an
assessment which is basically evaluating its comprehensive reading and math/analytics skills by
using pattern questions. Around 3 weeks later, the company notifies the candidate if he/she was
selected to continue to the Interview process which takes places mostly in its Fort Lauderdale
Offices, depending on the position. After the candidate has accepted the company offer, then start
being part of the Spirit’s team.
Spirit has a different operating model than its competitors, this is why the company
ensures its employees understand this and adopt the Spirit Way. As stated by its ex-CEO Ben
Baldanza, “We don’t want people to come with biases about what that job is, we are looking for
leaders, go-getters and genuine role models” (BrianSummers, 2015).
Training Process
The company is convinced that excellent training brings a better competitive edge of the
human capital. Due to the diversity and responsibility of its Job positions, Spirit ensures to meet
any requirement necessary to keep its entire staff trained and updated with the certifications
necessary. There is a lot of initial training the company does. Nowadays the Company is doing it
in Detroit with the General Maintenance Manual (GMM) that every employee has to follow.
56
On the other side, the Federal Aviation Administration (FAA) regulations require pilots
to have commercial licenses with specific ratings for the aircraft to be flown and be medically
certified as physically fit to fly. In this case, these certifications are subject to periodic renewal
requirements, including recurrent training and recent flying experience. Mechanics, quality-
control inspectors and flight dispatchers must be certificated and qualified for specific aircrafts.
The company provides such training in its learning and training centers. Flight attendants must
have initial and periodic competency training and qualification. Spirit provides this training
properly; however, these programs are subject to approval and monitoring by the FAA.
Management personnel directly involved in the supervision of flight operations, training,
maintenance and aircraft inspection must also meet experience standards prescribed by FAA
regulations. All safety-sensitive employees are subject to pre-employment, random and post-
accident drug testing. Therefore, by meeting the FAA’s regulations regarding safety and training,
Spirit works for managing properly its human resources to offer the best service and continue
lowing costs in the way.
The company has substantial experience in foreign local aviation, security and customs
regulations, local grown operations and flight crew training required for successful international
and overwater flight operations
By operating a single aircraft type, the A320 Family Aircraft, the company avoids the
incremental costs of training crews across multiple types, therefore, flight crews are entirely
interchangeable across all of its aircrafts and maintenance, spare parts inventories and other
operational support remain highly simplified compared to those airlines with more complex fleet.
So training is reinforced in every department.
57
Compensation and Benefits
Spirit Airlines current and retired employees can enjoy several benefits by being part of
the Team Spirit. Non Revenue and discounted travel privileges are one of the advantages
available to employees. Along with travel privileges, there is employee responsibility. “Our
company exists because of our customers. We provide the safe, reliable and friendly air
transportation at an affordable price. When travelling, all employees, their family members and
buddies, are expected to conduct themselves in a matter that reflects the courtesy and good
judgment for which Spirit’s Employees are known” (Pass and Free Travel Policy, 2006). Within
the benefits included are the Non-Revenue Passenger –an employee, qualified parent or
dependent, or buddy pass traveler on any type of free, reduced rate or service charge pass/ticket;
the Space Available Travel –which enables a non-revenue pass holder to standby for any Spirit
Flight; Dependent –An employee’s spouse, significant other, or an individual under the age of 23
years old; Parent/In-Laws –father, mother, step-father, step-mother or in-laws for who travel
authorization is requested.
“Effective 90 days from date of hire, all Spirit employees who work at least 20 hours per
week, their dependents, and parents are eligible for unlimited space available travel on Spirit
Airlines, free of charge, with the exception of International Charges” (Pass and Free Travel
Policy, 2006). Therefore, together with these benefits, employees and their dependents, parents
and buddy pass riders, have to follow a set of rules and personal conduct codes that are carefully
monitored by the company.
Safety and Security
Spirit is committed to the safety and security of its employees and passengers. This is
why they strive to comply or exceed health and safety regulation standards by maintaining an
58
active aviation safety program. In this way, Spirit ensures its entire personnel to participate in the
program and take an active role in the identification, reduction and elimination of hazards.
The company’s ongoing focus on safety relies on training its employees to proper standards and
providing them with the tools and equipment they require so they can perform their job functions
in a safe and efficient manner. Spirit maintains active, open lines of communication with the
Transportation Security Administration (TSA) at all its locations to ensure proper standards for
security of its employees and customers.
Organizational Culture
Spirit has a Company-wide business culture that is keenly focused on driving costs lower.
As stated in its reports to investors, the company is committed in providing the employee with
the best experience and empowers them to become getters and rockers, to help it to disrupt the
Airline Industry business model and reach its low-cost market leader goal. In this sense, the
company first ensures that its future employees fit in the company culture and are willing to give
their best in helping the company to succeed.
59
VII. Financial Analysis

7.1 Statement of Operations
Spirit Airlines, Inc.
Statement of Operations
(In thousands, except per share data)
Year Ended December 31 Increase or (Decrease) September 30 Forecasting

during 2015
2013 2014 2015 Amount Percntage 2016 2017
Operating revenues:
Passenger $ 986,018 $ 1,144,972 $ 1,169,338 $ 24,366.0 2% $ 900,031.0 $ 1,469,348.3
Non-Ticket $ 668,367 $ 786,608 $ 972,125 $ 185,517.0 24% $ 843,574.0 $ 1,253,316.3
Total Operating Revenue $ 1,654,385 $ 1,931,580 $ 2,141,463 $ 209,883.0 11% $ 1,743,605.0 $ 2,722,664.7
Operating expenses
Aircraft fuel (1) $ 551,746 $ 612,909 $ 461,447 $ (151,462.0) -25% $ 321,018.0 $ 568,453.0
Salaries, wages and benefits $ 262,150 $ 313,988 $ 378,210 $ 64,222.0 20% $ 349,530.0 $ 494,720.0
Aircraft rent $ 169,737 $ 195,827 $ 211,531 $ 15,704.0 8% $ 151,433.0 $ 262,008.7
Landing fees and other rents $ 83,604 $ 105,115 $ 131,077 $ 25,962.0 25% $ 114,096.0 $ 169,109.0
Distribution $ 67,481 $ 74,823 $ 86,576 $ 11,753.0 16% $ 73,190.0 $ 110,972.7
Maintenance, materials and repairs $ 60,143 $ 73,956 $ 80,448 $ 6,492.0 9% $ 72,010.0 $ 104,451.3
Depreciation and amortization $ 31,947 $ 46,971 $ 73,908 $ 26,937.0 57% $ 73,370.0 $ 98,364.7
Other operating $ 144,586 $ 149,675 $ 206,867 $ 57,192.0 38% $ 197,833.0 $ 272,811.3
Loss on disposal of assets $ 525 $ 3,008 $ 1,604 $ (1,404.0) -47% $ 1,166.0 $ 1,992.7
Special Charges (credits) (2) $ 174 $ 45 $ 673 $ 628.0 1396% $ 31,609.0 $ 11,209.3
Total Operating Expenses $ 1,372,093 $ 1,576,317 $ 1,632,341 $ 56,024.0 4% $ 1,385,255.0 $ 2,094,092.7
Operating Income $ 282,292 $ 355,263 $ 509,122 $ 153,859.0 43% $ 358,350.0 $ 628,572.0

Other expense (income):
Interest expense (3) $ 214 $ 2,747 $ 20,382 $ 17,635.0 642% $ 29,588.0 $ 30,244.7
Capitalized interest (4) $ (214) $ (2,747) $ (11,553) $ (8,806.0) 321% $ (9,163.0) $ (14,607.3)
Interest income $ (401) $ (336) $ 2,125) $ (1,789.0) 532% $ (4,235.0) $ (3,536.7)
60
Other expense $ 283 $ 2,605 $ 15 $ (2,590.0) -99% $ 407.0 $ 150.7

Total other income (expenses) $ (118) $ 2,269 $ 6,719 $ 4,450.0 196% $ 16,597.0 $ 12,251.3
Income before income taxes $ 282,410 $ 352,994 $ 502,403 $ 149,409.0 42% $ 341,753.0 $ 616,320.7
Provision for income taxes $ 105,492 $ 127,530 $ 185,183 $ 57,653.0 45% $ 125,367.0 $ 226,972.0
Net Income $ 176,918 $ 225,464 $ 317,220 $ 91,756.0 41% $ 216,386.0 $ 389,348.7

Basic earning per share $ 2.44 $ 3.10 $ 4.39 $ 1.3 42% $ 3.1 $ 5.41
Diluted earnings per share $ 2.42 $ 3.08 $ 4.38 $ 1.3 42% $ 3.1 $ 5.40
61
7.2 Balance Sheet

Spirit Airlines, Inc.
Balance Sheets
(In thousands, except per share data)
Increase or (Decrease) Forecasting
Ended December 31, during 2015 September 30
Assets 2014 2015 Amount Percentag 2016 2017
Current assets:
Cash and Cash equivalents $ 632,784 $ 803,632 $ 170,848 27% $ 825,904 $ 1,078,933
Account receivable, net $ 22,685 $ 28,266 $ 5,581 25% $ 100,083 $ 61,627
Aircraft Maintenance deposits $ 36,857 $ 73,415 $ 36,558 99% $ 35,892 $ 85,379
Prepaid Income Taxes - $ 72,278 - - $ 6,060 $ 74,298
Prepaid Expenses & other current assets $ 29,172 $ 48,749 $ 19,577 67% $ 48,455 $ 64,901
Total current assets $ 721,498 $ 1,026,340 $ 304,842 42% $ 1,103,499 $ 1,394,173
Property and equipment
Flight equipment $ 204,462 $ 827,282 $ 622,820 305% $ 1,386,310 $ 1,289,385
Ground and other equipment $ 57,012 $ 82,459 $ 25,447 45% $ 109,451 $ 118,943
Less accumulated depreciation $ (36,099) $ (65,524) $ (29,425) 82% $ (105,653) $ (100,742)
$ 225,375 $ 844,217 $ 618,842 275% $ 1,390,108 $ 1,307,586
Deposits on flight equipment purchase contracts $ 242,881 $ 286,837 $ 43,956 18% $ 272,690 $ 377,734
Long-term aircraft maintenance deposits $ 213,147 $ 206,485 $ (6,662) -3% $ 198,426 $ 272,627
Deferred heavy maintenance net $ 123,108 $ 89,127 $ (33,981) -28% $ 79,878 $ 115,753
Other long-term assets $ 66,744 $ 77,539 $ 10,795 16% $ 85,024 $ 105,880
Total assets $ 1,592,753 $ 2,530,545 $ 937,792 59% $ 3,129,625 $ 3,573,753
Liabilities and Shareholder's equity

Current liabilities:
Accounts payable $ 13,402 $ 17,043 $ 3,641 27% $ 29,906 $ 27,012
Air traffic liability $ 188,870 $ 216,831 $ 27,961 15% $ 238,793 $ 296,429
Current maturities of long-term debt $ 10,431 $ 49,637 $ 39,206 376% $ 84,443 $ 77,785
Other current liabilities $ 152,921 $ 182,729 $ 29,808 19% $ 217,779 $ 255,322
62
Total Current Liabilities $ 365,624 $ 466,240 $ 100,616 28% $ 570,921 $ 656,547
Long-term debt less current maturities $ 135,232 $ 596,693 $ 461,461 341% $ 894,809 $ 894,963
Long-term deferred income taxes $ 66,367 $ 221,481 $ 155,114 234% $ 299,231 $ 321,225
Deferred gains and other long-term liabilities $ 22,455 $ 20,821 $ (1,634) -7% $ 20,108 $ 27,524
Shareholders' equity:
Common stock $ 7 $ 7 $ - 0% $ 7 $ 9
Additional paid-in-capital $ 526,173 $ 544,277 $ 18,104 3% $ 549,375 $ 727,402
Treasury stock at cost: 1,861,089 and 132,142

shares as of December 31, 2015 and 2014, $ (3,921) $ (116,182) $ (218,572) $ (189,039)
respectively $ (112,261) 2863%
Retained earnings $ 481,534 $ 798,754 $ 317,220 66% $ 1,015,140 $ 1,137,134
Accumulated other comprehensive loss $ (718) $ (1,546) $ (828) 115% $ (1,394) $ (2,011)
Total shareholders' equity $ 1,003,075 $ 1,225,310 $ 222,235 22% $ 1,344,556 $ 1,673,495
Total liabilities and shareholders' equity $ 1,592,753 $ 2,530,545 $ 937,792 59% $ 3,129,625 $ 3,573,753
63
7.3 Statement of Cash Flows

Spirit Airlines, Inc
Statements of Cash Flows
(In thousands)
Increase or
Year Ended December 31 (Decrease) during Forecasting
2015
Percen-
2013 2014 2015 Amount tage Sept, 2016 2017
Operating activities:
Net income $ 176,918 $ 225,464 $ 317,220 $ 91,756 41% $ 216,386 $ 245,091
Adjustments to reconcile net income to
net cash provided by operations:
Unrealized (gains) losses on open
derivative contracts, net $ 265 - $ 2,334 $ 2,334
Losses reclassified from other
comprehensive income $ 267 $ (89)
Equity-based compensation $ 5,689 $ 8,797 $ 9,222 $ 425 5% $ 5,503 $ 7,388
Allowance for doubtful accounts
(recoveries) $ 143 $ (45) $ 12 $ (33) 73% $ 213 $ (59)
Amortization of deferred gains and
losses $ (558) $ (185) $ 1,165 $ 980 530% $ 3,837 $ (114)
Depreciation and amortization $ 31,947 $ 46,971 $ 73,908 $ 26,937 57% $ 73,370 $ 49,451
Deferred income tax expense $ 2,047 $ 34,811 $ 155,614 $ 120,803 347% $ 77,627 $ 129,738
Loss on disposal of assets $ 525 $ 3,008 $ 1,604 $ (1,404) -47% $ 1,166 $ 1,215
Lease termination cost $ 31,609 $ (10,536)
Changes in operating assets and
liabilities: $ -
Accounts receivable $ (461) $ 606 $ (5,592) $ (6,198) -1023% $ (7,840) $ (2,979)
Aircraft maintenance deposits $ (24,058) $ (31,925) $ (32,101) $ (176) 1% $ (38,299) $ 19,335)
Long-term deposits and other assets $ (65,654) $ (48,382) $ (103,613) $ (55,231) 114% $ 66,218 $ (125,686)
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Accounts payable $ (1,674) $ (10,034) $ 2,706 $ 12,740 -127% $ (43,252) $ 17,123

Air traffic liability $ 36,226 $ 21,135 $ 36,387 $ 15,252 72% $ (7,044) $ 38,735
Other liabilities $ 24,235 $ 13,731 $ 14,119 $ 388 3% $ 21,684 $ 6,891
Other $ (214) $ (2,747) $ 38,596 $ (12,865)
Net cash provided by operating activities $ 195,376 $ 260,512 $ 472,985 $ 212,473 82% $ 440,041 $ 326,305
Investing activities:
Proceeds from sale of property and
equipment $ 50 $ (17)
Capitalized interest - - $ (10,159) $ (7,032) $ (7,815)
Pre-delivery deposits for flight
equipment, net of refunds $ (70,288) $ (115,802) $ (142,323) $ (26,521) 23% $ (109,260) $ (105,903)
Purchase of investment securities $ (100,076) $ 33,359
Purchase of property and equipment $ (19,812) $ (186,569) $ (548,800) $(362,231) 194% $ (447,455) $ (399,648)
Net cash used in investing activities $ (90,100) $ (302,371) $ (701,282) $(398,911) 132% $ (663,773) $ (480,024)
Financing activities:
Proceeds from issuance of long-term
debt - $ 148,000 $ 536,780 $ 388,780 263% $ 378,569 $ 410,590
Proceeds from stock options exercised $ 852 $ 174 $ 32 $ (142) -82% $ 92 $ 1
Payments ondebt and capital lease
obligations - $ (1,233) $ (26,364) $ (25,131) 2038% $ (29,663) $ (16,476)
Proceeds from sale and leaseback
transactions $ 6,900 $ 7,200 $ 7,300 $ 100 1% -
Payments to pre-IPO shareholders
pursuant to tax receivable agreement - $ (5,643) - -
Excess tax benefits from equity-based
compensation $ 1,927 $ 1,871 $ 8,850 $ 6,979 373% $ (497) $ 9,016
Repurchase of common stock $ (1,140) $ (1,630) $ (112,261) $(110,631) 6787% $ (102,390) $ (78,131)
Debt issuance costs - $ (4,727) $ (15,192) $ (10,465) 221% $ (107) $ (15,156)
Net cash provided by financing activities $ 8,539 $ 144,012 $ 399,145 $ 255,133 177% $ 246,004 $ 317,144
Net increase in cash and cash equivalents $ 113,815 $ 102,153 $ 170,848 $ 68,695 67% $ 22,272 $ 163,424
Cash and Cash equivalents at beginning
of period $ 416,816 $ 530,631 $ 632,784 $ 102,153 19% $ 803,632 $ 364,907
Cash and cash equivalents at end period $ 530,631 $ 632,784 $ 803,632 $ 170,848 27% $ 825,904 $ 528,331
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Supplemental disclosures
Cash payments for:
Interest (net of capitalized interest) - - $ 7,061 $ 26,025 $ (1,614)
Income taxes paid, net of refunds $ 85,705 $ 89,104 $ 95,933 $ 6,829 8% $ (18,169) $ 101,989
Non-cash transactions: -
Liability and equity related to tax
receivable agreement $ (2,336) - - -
Capital expenditures funded by capital
lease borrowings $ (3,234) $ (173) - -
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7.4 Company’s Financial Analysis
Financial Highlights 2014 – 2015
Valuation Measures
Enterprise Value 2.97B
Enterprise Value/EBITDA 5.13
Revenue 2.22B
Liquidity
Current Ratio 2.2
Acid-Test-Radio 1.78
Profitability
Operating Margin 23.80%
Profit Margin 14.81%
Return on Assets 15.39%
Return on Equity 28.47%
Solvency
Debt to total Assets 51.58%
Times interest Earned 25.0
The year 2015 marked the Company’s ninth consecutive year of profitability. “In 2015,
we increased our capacity by 30.0% as we grew our fleet of Airbus single-aisle aircraft from 65
to 79 aircraft, launched service to 40 new markets and added 1 new destination to Cleveland,
Ohio”(Form 10K, 2016).
Liquidity and Capital Resources
Spirit’s primary sources of liquidity are cash on hand, cash provided by operations and
capital from asset financing. The company’s total cash at December 31, 2015 was $803.6
million, an increase of $170.8 million from December 31, 2014, holding a Current and Acid Test
Ratios of 2.2 and 1.78 respectively, showing the ability the Company has to pay its short-term
and long-term obligations. According to the company, the primary uses of liquidity are for
working capital needs, capital expenditures, aircraft pre-delivery deposit payments (PDPs) and
maintenance reserves (Form 10K, 2016).
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The company shows a significant increase in Cash Flows from 2014 to 2015. Operating
activities in 2015 provided $473.0 million in cash compared to $260.5 million in 2014. The
increase resulted from higher net income, larger cash collections on flights sold but not yet
flown, and higher deferrals of income taxes year over year. This represents an increase of 82%
compared to 2014. By 2015 the Company had an increase of $398.9 million in investing
activities. The increase was mainly due to the purchase of 14 aircraft and 1 spare engine sale
leaseback transaction during 2015. During 2015, financing activities provided $399, an increase
of 177% compared to 2014.
Profitability
In 2015, the Company generated operating revenues of $2,141.5 million and operating
income of $509.1 million, resulting in a 23.8% operating margin and net earnings of $317.2
million. In 2014, Spirit generated operating revenues of $1,931.6 million and operating income
of $355.3 million resulting in an 18.4% operating margin and net earnings of $225.5 million.
“Operating revenues increased year over year mainly as a result of a 27.1% increase in traffic.
Increased operations resulted in higher operating expenses across the board which were mostly
offset with a significant decrease in fuel costs due to lower fuel cost per gallon” (Form 10K,
2016).
Operating expenses increased by $56.0 million or 3.6% in 2015 primarily due to the
Company’s 30% growth in capacity which drove increases in operating expenses offset almost
entirely by a significant decrease in fuel cost per gallon.
Solvency
The Company’s current leverage ratio shows that 51.58% of the Spirit assets have been
financed through debt, and doesn’t have so much financial flexibility. However, Spirit shows a
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relatively good ability to meet its debt and other obligations by the increased shown on its cash
flow and profitability margin from 2014 to 2015.
7.5 Cost and Revenue per Available Seat Mileage
Exhibit 21. Operating Revenues
% change
Year Ended Year Ended 2015
2015 2014 versus
2014
Passenger (thousands) $ 1,169,338 $ 1,144,972 2.10%
Non-ticket (Thousands) $ 972,125 $ 786,608 23.60%
Total operating revenue (thousands) $ 2,141,463 $ 1,931,580 10.90%
Total operating revenue per ASM (TRASM) Cents 10.08 11.82 -14.70%
Average ticket revenue per passenger flight segment $ 65.25 $ 80.11 -18.50%
Average non-ticket revenue per passenger flight segment 54.24 55.03 -1.40%
Total Revenue per passenger flight segment $ 119.49 $ 135.14 -11.60%
Exhibit 22. Operating Expenses
Year Ended December 31,

2015 2014
% of CASM % of CASM (in
revenue (in cents) revenue cents)
Operating revenue 100% 100%
Operating expenses:
Aircraft fuel 21.5% 2.17 31.7% 3.75
Salaries, wages and benefits 17.7% 1.78 16.3% 1.92
Aircraft fuel 9.9% 1.00 10.1% 1.20
Landing fees and other rentals 6.1% 0.62 5.4% 0.64
Distrinution 4.0% 0.41 3.9% 0.46
Maintenance, materials and repairs 3.8% 0.38 3.8% 0.45
Depreciation and amortization 3.5% 0.35 2.4% 0.29
Other operating expenses 9.7% 0.97 7.7% 0.92
Loss on disposal of assets 0.1% 0.01 0.2% 0.02
Special charges
Total operating expense 76.2% 81.6%
CASM 7.68 9.65
Adjusted CASM 7.69 9.55
Adjusted CASM ex fuel 5.50 5.88
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Exhibit 21. Operating Profitability
Year Year % increase or

2015 2014 decrease
2.40 2.17 10.6%
Used to measure and compare the efficiency of various airlines, RASM (Revenue per
available seat mileage) represents a very good indicator for Spirit. The company’s effort to lower
its CASM (Cost per available seat mileage) is based on its ultra-low cost strategy and is the
reason for the ancillary and non-ticket services and products it offers in order to increase its
operating profitability (the difference between RASM and CASM). The company’s traffic grew
by 27.1% as Spirit is continuing to address underserved markets with ultra-low fares. Therefore,
increased competitive pressures from major domestic network carriers aggressively discounting
fares led to a 12.8% decrease in passenger yields year over year. As a result of this pricing
environment, TRASM (Total Revenue per Available Seat Mileage) in 2015 was 10.08 cents, a
decrease of 14.7% compared to 2014. Total revenue per passenger flight segment decreased
11.6% year over year, from $135.14 to $119.49, driven by a decrease of 18.5% in ticket revenue
per passenger flight segment.
On the other hand, Spirit’s operating cost structure is a primary area of focus and is at the
core of the Company’s ULCC business model in which it competes on the basis of price. During
201, the adjusted CASM ex-fuel decreased by 6.5% to 5.50 cents. “The decrease on a per unit
basis was primarily due to a decrease in aircraft rent and in salaries, wages and benefits” (Form
10K, 2016). The company currently shows a profitability margin of 2.40 with an increase of
10.6% compared to 2014.
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7.6 Financial Highlights 2016
Net income for the third quarter 2016 was $81.4 million.
Operating Margin for the third quarter 2016 was 21.8 percent, or 23.0 percent excluding
special items (Spirit Airlines, 2016).
Spirit ended the third quarter 2016 with unrestricted cash, cash equivalents and short-term
investments of $926.0 million. This is a great advantage when considering implementing the new
route to Ecuador as the company is in a good financial position to invest (Spirit Airlines, 2016).
Spirit’s return on invested capital (before taxes and excluding special items) for the
twelve months ended September 30, 2016 was 25.3 percent (Spirit Airlines, 2016).
Spirit’s operating revenue was $621.3 million, an increase of 8.1 percent compared to the
third quarter 2015, driven by a 12.6 percent increase in flight volume and 0.8 point increase in
load factor (Spirit Airlines, 2016).
Total operating expenses, including special items of $7.8 million primarily related to
lease termination charges, increase 16.4 percent or $68.5 million, year over year to $486.1
million driven by an increase in flight volume (Spirit Airlines, 2016).
Total revenue per available seat mile (TRASM) for the third quarter 2016 decreased 7.0
percent compared to the same period last year, primarily driven by a decrease in passenger yield
as a result of industry competitive pricing pressures (Spirit Airlines, 2016).
Spirit reported third quarter 2016 cost per available seat mile ("ASM") excluding special
items and fuel (“Adjusted CASM ex-fuel”) of 5.48 cents, an increase of 1.7 percent compared to
the same period last year, primarily driven by higher salaries, wages, and benefits, and higher
maintenance expense partially offset by lower aircraft rent per ASM (Spirit Airlines, 2016).
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7.7 Financial Forecasting of the New Strategy
Main Facts and Data to consider analyzing cost and revenue:
Average Distance in hours 4.5 hours

Roundtrip Distance Between FLL and UIO 3620 Miles / 5820 Kilometers
Capacity 220 maximum
Gas Price in Ecuador 0.39 per liter (1.48 per gallon)
Gas Price in Fort Lauderdale 0.41 per liter (1.56 per gallon)
Fuel capacity 24 050 liters (standard), 30 030 liters (maximum)
Maximum take-off weight 93 500 kg
Range 5 600 km (3 024 nmi; 3 480 mi)
UIO Airport Charges
Gate (From 46 to 180 min (t= time in min) 125.03 + 1.39 * (t - 45)
Landing Fees (50 – 99.9 Ton) 16.10
Lighting Fees (50 – 99.9 Ton) 4.35
Parking Fees (50 – 99.9 Ton) 2.04
Crew 2 pilots and 4-6 flight attendants
Average Pilot Salary per hour US $80 per hour (depending on antiquity)
Average Flight Attendant Salary per hour US $60 per hour
Exhibit 24. Cost and Revenue Forecasting
Cost per flight RoundTrip
Aircraft Fuel $ 14,114.10

Salaries, wages and benefits $ 7.520,00
FLL Airport fees (landing, take off and other rentals) $ 12.000,00
UIO Airport fees $ 2.932,10
Landing fees $ 1.505,35
Lighting fees $ 406,73
Parking fees $ 190,74
Gate (Max 120 min) $ 229,28
Other (Third Party Services, distribution &
Advertising) $ 5.000,00
Other Operating Costs $ 10.000,00
Total Operating costs per flight (roundtrip) to UIO $ 51,566.20
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Exhibit 25. Revenue Forecasting
Revenue per flight One Way Roundtrip

# of passengers (220 per way, 440 roundtrip)
$ 55.000,00 $ 110.000,00
average ticket price
Estimated Non-ticket Rev $ 8.250,00 $ 16.500,00
Total Estimated Revenue $ 63.250,00 $ 126.500,00
Revenue after costs $ 74,933.80

Estimated Gross Margin before further deductions 58%
7.8 Trend Analysis
The Airline Industry has increased its industry consolidation and capacity discipline
thanks to cost reductions led by the decline of energy prices, which has favored the generation of
more Revenue (RASM) and reduction of Costs (CASM) for both Network and Value US
Carriers.
Exhibit 26 Comparison of Domestic RASM and CASM, Q2 2014-2015
Source: Airline Economic Analysis, 2016
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As an overview of the Airline Industry performance, there is a generic increase in
operating margins for both network and value carriers in their domestic and international
operations. Spirit Airlines is part of the value carriers, together with Allegiant, Frontier, JetBlue,
Southwest and Virgin America. “In second quarter 2015, operating profit for US network airlines
increased 77.5% over the same period in 2014 to $4.0 billion. Domestic operating margin
increased to 15.8% for the group, up 7.3 points over the 2014 results. The operating margin for
international operations was up by 6.2 points to 14.2% for the network group. Operating profits
for US value airlines increased 55.2% to $1.6 billion during the second quarter 2015. Domestic
operations for the value group resulted in a 19.5% operating margin (up 6.2 points), and
international operations produced an impressive 24.1% margin (up 6.4 points)” (Staknaker,
Usman &Taylor, 2016).
Exhibit 27 shows the relation between RASM and CASM for US Airlines, showing the
Operating profitability of them respectively. As observed, Spirit has an Operating Profit of 2.4
same as American Airlines, one of the market leaders and huge competitor. By lowing fares
dramatically and increasing its routes and markets, Spirit is ensuring to improve its position in
the industry and become the Ultra-Low Cost leader for the domestic and international market.
The market leaders in this moment in terms of Profitability are Delta and Alaska Airlines with a
3.1 Operating Profit, and the one who shows the lowest Operating Profit is United with a 0.9,
very low compared with its competitors.
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Exhibit 27 Domestic RASM/CASM by Airline (Operating Profit) Q2, 2015
Revenue Analysis
A combination of factors drives changes in airline revenue, including capacity, load factor
(passenger demand), yield, cargo revenue, and fees (ancillary revenue) among others. Spirit
Airlines is a market leader in Ancillary revenue which is composed by Reservation,
Miscellaneous and Baggage fees. “Ancillary fees vary greatly among US carriers. For example,
Spirit Airlines generated nearly $50 per passenger from these fees, representing 39.8% of
segment passenger revenue. Allegiant, operating with a similar business model, collected $39.35
per segment passenger. To date, Southwest has not participated in the addition of ancillary fees
or unbundling passenger fares, and collected the industry’s lowest ancillary revenue per
passenger at $4.46. Delta collected $22.48 per segment passenger, the highest among network
airlines, while Hawaiian collects $7.12 per segment passenger” (Staknaker, Usman &Taylor,
2016). Exhibit 26, shows this relation for the US Airlines.
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Exhibit 28 System Service Fees and Ticketed Revenue, Q2 2015
In terms of Revenue generation Spirit still has a lot of work to do. Compared with the
Industry, Spirit is located last together with Frontier Airlines in Revenue Generation with a
RASM of 10.6 approximately. “Spirit’s ultra-low fare model resulted in the carrier having the
lowest domestic RASM (both stage-length adjusted and unadjusted). Delta’s industry-leading
unit revenue resulted from the carrier’s ability to generate a significant revenue premium over
other domestic carriers” (Staknaker, Usman &Taylor, 2016).
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Exhibit 29 Domestic RASM by Airline-Stage-length adjusted to 1,000 Miles, Q2 2015
Cost Analysis
Some of the main drivers for cost generation in the Airline Industry are Labor and Fuel.
Thanks to the general reduction of oil price in 2015, US Airlines have been able to reduce cost
significantly. “US airline system wide unit cost declined 12.6% year-over-year to 11.5¢ during
second quarter 2015, marking the largest overall cost decline since 2009. Network carrier system
cost slid 12.6%, falling from 13.5¢ to 11.8¢. Value carriers reduced system wide costs from
11.8¢ in 2014 to 10.4¢ in 2015, down 11.7%. The network carrier domestic unit cost declined
13.2% in second quarter 2015 from 14.1¢ to 12.2¢. Value carrier costs dropped at a slightly
slower rate (11.7%), slipping from 12.0¢ in second quarter 2014 to 10.6¢ in 2015”
(Staknaker,Usman&Taylor, 2016). The rapid decline in cost was driven by falling fuel prices,
77
with the network unit fuel cost falling 30.2% and value carrier unit fuel cost down 34.7%. After
the decline, fuel cost represents 26.2% and 25.3% of unit cost for network and value carriers,
respectively.
Exhibit 30 System CASM by Group (Excluding Regional Affiliates), Q2 2014/2015
Cost is the main driver for Spirit’s main strategy of becoming the market leader in lowing
cost per flight. Compared with the Industry, “With a unit cost of 8.2¢, Spirit Airlines remained
the lowest-cost domestic operator in second quarter 2015. The carrier’s unit cost dropped 15.9%
year-over-year. JetBlue had the highest unit cost among value airlines in the second quarter
at 11.2¢. All value carriers reported fuel cost reductions in excess of 30% year-over-year”
(Staknaker, Usman &Taylor, 2016).
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Exhibit 31 Domestic CASM Details for Individual Carriers, Q2 2014/2015
VII. Legal And Ethical Analysis
8.1 U.S.-Ecuador Air Transport Agreement
As of September 26, 1986, The Government of the United States of America and the
Government of the Republic of Ecuador, signed an Air Transport Agreement between the nations
to promote an international air transport system based on fair competition among airlines in the
marketplace; to facilitate the expansion of fair international air transport opportunities in the
public interest; to ensure the highest degree of safety and security in international air transport
and reaffirming their grave concern about acts or threats against the security of aircraft, which
jeopardize the safety of persons or property, adversely affect the operation of air transportation,
and undermine public confidence in the safety of civil aviation (U.S. Department of State, 1986).
79
8.2 Civil Aviation Law (Codification No. 2006016)
In order to operate in the Ecuadorian Market, any airline have to follow the Civil Aviation
Law with the Department of Civil Aviation in charge of administering, regulating, monitoring
and controlling the aeronautical and airport activity, guaranteeing the operational safety in the
country. (Direccion de Aviacion Civil, n.d.).
8.3 Airline Industry Regulation
Operational Regulation
The airline industry is heavily regulated, especially by the federal government. Spirit
Airlines has to deal with two of the primary regulatory authorities overseeing air transportation in
the United States, the DOT (Department of Transportation) and the FAA (Federal Aviation
Agency). The DOT has jurisdiction over economic issues affecting air transportation, such as
competition, route authorizations, advertising and sales practices, baggage liability and disabled
passenger transportation, how airlines handle interactions with passengers through advertising,
the reservation process, at the airport and on board the aircraft. Additional consumer rules
proposed in 2014 that would require airlines to disclose through all points of sale the fees for
certain basic ancillary services associated with the air transportation consumers are buying or
considering buying may be implemented in 2016. The DOT has authority to issue certificates of
public convenience and necessity required for airlines to provide air transportation.
The FAA is responsible for regulating and overseeing matters relating to air carrier flight
operations, including airline operating certificates, aircraft certification and maintenance and
other matters affecting air safety. The FAA requires each commercial airline to obtain and hold
an FAA air carrier certificate. This certificate, in combination with operations specifications
issued to the airline by the FAA, authorizes the airline to operate at specific airports using aircraft
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approved by the FAA. “We believe we hold all necessary operating and airworthiness
authorizations, certificates and licenses and are operating in compliance with applicable DOT
and FAA regulations, interpretations and policies” (Spirit’s Form 10K, 2016).
International Regulation
All international service is subject to the regulatory requirements of the foreign
government involved. “We currently operate international service to Aruba, Colombia, Costa
Rica, Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Mexico,
Nicaragua, Panama, Peru and St. Maarten, as well as Puerto Rico and the U.S. Virgin Islands”
(Spirit’s Form 10K, 2016). If the company decides to increase its routes to additional
international destinations, it will be required to obtain necessary authority from the DOT and the
applicable foreign government. International service is also subject to Customs and Border
Protection, or CBP, immigration and agriculture requirements and the requirements of equivalent
foreign governmental agencies. “We have implemented a comprehensive security program at our
airports to reduce the risk of illegal cargo being placed on our aircraft, and we seek to cooperate
actively with CBP and other U.S. and foreign law enforcement agencies in investigating
incidents or attempts to introduce illegal cargo” (Spirit’s Form 10K, 2016).
Security Regulation
The TSA was created in 2001 with the responsibility and authority to oversee the
implementation, and ensure the adequacy of security measures at airports and other transportation
facilities. On the other hand, the business employs systems and websites that allow for the secure
storage and transmission of proprietary or confidential information regarding its customers,
employees, suppliers and others, including personal identification information, credit card data
and other confidential information.
81
Environmental Regulation
Airlines are subject to various federal, state and local laws and regulations relating to the
protection of the environment and affecting matters such as aircraft engine emissions, aircraft
noise emissions and the discharge or disposal of materials and chemicals, which laws and
regulations are administered by numerous state and federal agencies. The Environmental
Protection Agency, or EPA, regulates operations, including air carrier operations, which affect
the quality of air in the United States. “We believe the aircraft in our fleet meet all emission
standards issued by the EPA” (Spirit’s Form 10K, 2016). Concern about climate change and
greenhouse gases may result in additional regulation or taxation of aircraft emissions in the
United States and abroad. Federal law recognizes the right of airport operators with special noise
problems to implement local noise abatement procedures so long as those procedures do not
interfere unreasonably with interstate and foreign commerce and the national air transportation
system. These restrictions can include limiting nighttime operations, directing specific aircraft
operational procedures during takeoff and initial climb, and limiting the overall number of flights
at an airport. Spirit is aware about it, this is why the Company is investing and planning to
change gradually some of its aircrafts engines for some efficient engines (neo’s engines),
reducing at some point its pollution footprint. As of December 31, 2015, Spirit’s future fleet
plan, net of contractual lease returns, is illustrated in the table below:
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Exhibit 32 Spirit’s Future Fleet Plan
Aircraft Delivery Schedule (net of Scheduled Retirements) as of October 25, 2016

A319 A320 CEO A320 NEO A321 CEO A321 NEO Total
Total Aircraft Year- 29 42 - 8 - 79
end 2015
1Q16 - 2 - 2 - 4
2Q16 - 1 - 3 - 4
3Q16 - - - 2 - 2
4Q16 - - 5 1 - 6
Total Aircraft Year- 29 45 5 16 - 95
end 2016
2017 (1) 4 - 9 - 12
2018 - 5 4 5 - 14
2019 (1) 1 12 - - 12
2020 (5) - 16 - - 11
2021 (5) - 18 - - 13
Total Aircraft Year- 17 55 55 30 - 157

End 2021
Notes:
Includes aircraft on firm order as well as 5 leased A320 neo aircraft
The listed A321ceo aircraft in 2017 reflect scheduled deliveries of 11 A321ceo aircraft, net of 2 A321ceo
lease expirations.
Labor Regulations
Spirits has to deal with the United States Department of Labor (DOL) the department
responsible for occupational safety, wage and hour standards, unemployment insurance benefits,
reemployment services, and some economic statistics; many U.S. states also have such
departments. On the other hand, the Railway Labor Act (RLA) governs the company’s relations
with labor organizations. This way, Spirits ensures it is meeting the employee’s expectations and
needs by taking care of any bargaining agreement, mediations, impasses and labor concerns.
83
8.4 Code of Business Conduct & Ethics
Spirits has a Code of Business Conduct & Ethics and a Corporate Guidelines document
that states all the principles and general guidelines for conducting the business of Spirit Airlines,
consistent with the highest standards of business ethics. “This code applies to all of our directors,
officers and other employees. We refer to all officers and other employees covered by this Code
as ‘Company Employees’ or simply ‘Employees’, unless the context otherwise requires” (Code
of Business, 2016). The code was designed in a way so that potential conflicts of interest can be
identified and the way they be address. It also states the way confidential information has to be
treated for both directors and employees, including non-public information of the company that
might be on use of competitors or customers. The code also states the relationship with
stakeholders, the public communications and regulation fair disclosure, the company records, the
protection and use of company assets, the interaction with the Government and other institutions
and agencies. All of this has to be follow by the employees who are trained and informed about
this business ethical behavior and the company culture.
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IX. Conclusions
After analyzing the opportunities that Ecuador represents for Spirit Airlines, the Company
should consider start making negotiations with the proper authorities in the mentioned country in
order to open the Gate for this expansion strategy. The Company currently has an exceptional
financial performance, a very effective young fleet and is being recognized as a cost leader in the
market. This new route would represent a significant increase of its operational profitability and
its market share. The company´s current and future fleet gives it the possibility to open, not only
this route, but also other strategic destinations in South America, connecting United States with
different South American countries at very low fares, taking advantage of the purchasing trends
of the Latin American populations which are mainly driven by cost savings and great deals.
By analyzing this new opportunity, the company could start substantially expanding to the
South American market, considering as well the possibility of opening a new hub that serves the
South American Market. Besides, the increasing amount of the population from Latin American
origin represents a very good opportunity for an Ultra-Low Cost Carrier as Spirit Airlines to
become a market leader in a short time.
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X. References
Bachman, Justin. “Spirit Airlines Sees All Those Passenger Complaints as Mere
Misunderstandings.” Bloomberg Business Week. April 18, 2014. Accessed September
25, 2016 from http://www.businessweek.com/articles/2014-04-18/spirit-airlines-
passenger-complaints-part-of-its-business-model
BC. (2014). Over $87 Million in New Hotel Investment Announced for Quito, Ecuador.
Retrieved November 14, 2016, from http://www.marketwatch.com/story/over-87-million-
in-new-hotel-investment-announced-for-quito-ecuador-2014-10-22
Dirección General de Aviación Civil del Ecuador. (n.d.). Ley de Aviacion Civil. Retrieved
November 14, 2016, from http://www.aviacioncivil.gob.ec/
F. (2006). PASS AND FREE TRAVEL POLICY - AFA-CWA Spirit Airlines. Retrieved October
20, 2016, from http://fliphtml5.com/ajmw/bnyp/basic
In, B. O. (n.d.). SAVE : Summary for Spirit Airlines, Inc. - Yahoo Finance. Retrieved September
04, 2016, from http://finance.yahoo.com/quote/SAVE
In, B. O. (n.d.). SAVE Key Statistics | Spirit Airlines, Inc. Stock - Yahoo Finance. Retrieved
October 18, 2016, from https://finance.yahoo.com/quote/SAVE/key-statistics?p=SAVE
Investopedia, 2015.The Industry Handbook: The Airline Industry. Retrieved on September 28,
2016. From:
http://www.investopedia.com/features/industryhandbook/airline.asp#ixzz4Lxi47D41
Jenkins, D., Mark, J., & Miller, M. (2011). Consumer regulation and taxation of the U.S. airline
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Expansion Strategy For Spirit Airlines - Yesenia Alvarez

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Expansion Strategy For Spirit Airlines - Yesenia Alvarez

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Running Head: SPIRIT AIRLINES, INC

Business Plan - Research Project

SPIRIT AIRLINES, INC. LESS MONEY, MORE GO.

Yesenia Alvarez Perez

Professor, Dr. Armando Salas-Amaro

MBA710: Capstone Field Project

November 23, 2016

Exhibit 14. Spirit Airlines Main Destinations by Region -------------------------- 41

Exhibit 26. Comparison of Domestic RASM and CASM ------------------------- 73

Spirit Airlines, Inc. Less Money, More Go.

Spirit Airlines (NASDAQ: SAVE) is an ultra-low-cost, low-fare airline that offers

Its ultra-low-cost carrier (ULCC) business model, allows it to compete principally by

such as bags, advance seat assignments and refreshments.

headquarters is based in Miramar, Florida. (Form 10K, 2016).

and economic development with lower prices.

$1,500,000 Net Profit

II. COMPANY OVERVIEW

2.1 Legal Form of the Company

Name: Spirit Airlines, Inc

Type of Company: Corporation

FEI/EIN Number: 38-1747023

Current Address: 2800 Executive Way, Miramar, Fl 33025

CEO: Robert Fornado

Stock Market (NASDAQ): SAVE

2.2 Mission Statement

experience and providing the best service. (Spirit Airlines, 2016).

2.3 Vision Statement

2.4 Goals and Objectives

focusing on the following objectives:

 Delivering friendlier service;

 Improving their operational reliability and recoverability;

 Reducing their complaint ratio through better operations, continued education

efforts, and “smoothing: the edges;

 Enhancing merchandising opportunities with deployment of mobile website;

 Offering more products / capturing a larger piece of the travel budget;

 Enhancing loyalty spend by improving benefits and products;

 Keeping a consistent focus on maintaining low unit operating costs;

benchmarked against the best industry standards;

 Generating and maintaining an adequate level of liquidity to insulate against

as a result of changing general economic conditions.

2.5 Current Business Model and Strategy

The Company uses an ULCC (Ultra-Low-Cost-Carrier) business Model, driven by their

part of their Plane Simple Strategy, consisting on:

 High aircraft utilization;

 High-density seating configurations on their aircraft and simplified onboard

product designed to lower costs:

 No hub-and-spoke network inefficiencies;

 Highly productive workforce;

 Opportunistic outsourcing of operating functions;

 Reduced sales, marketing and distribution cost through direct-to-customer

 Efficient flight scheduling, including minimal ground times between flights;

 A company-wide business culture that is keenly-focused on driving costs lower.

Innovative Revenue Generation: The company executes its innovative, unbundled

use, with the following strategies:

 charging for checked and carry-on baggage;

 passing through all distribution-related expenses;

 charging for premium seats and advance seat selection;

 maintaining consistent ticketing policies, including service charges for changes

 generating subscription revenue from its $9 Fare Club low-fare subscription

 deriving brand-based revenues from proprietary services, such as its FREE

SPIRIT affinity credit card program;

park tickets) packaged with air travel on its website;

 selling third-party travel insurance through their website; and