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Case 15
Spirit Airlines: The Lowest Possible Price At All Costs
Spirit Airlines is cheap. Cheaper by far than any other airline in the U.S. It achieves such low
uding a carry-on bag), the airline charges
a fee for. While this has upset many customers as they are charged for things they did not expect
to pay for, most customers are just fine paying less and getting less. For this reason, Spirit is
soaring so far as growth and profits are concerned.
The teaching objectives for this case are to:
1. Allow students to understand the effects of pricing as a tool for differentiation.
Chapter 1
1. Do you feel Spirit Airlines has a customer orientation? Explain your answer.
Spirit airlines wants its customers to have a good experience. In order to be the cost leader, it
also has to train its customers on how to use their system. The more the customers do and the
2. What is Spirit Airlines value proposition?
Chapter 11
1. Based on the concept of customer value-
Spirit does not start with its costs and mark up by a certain percentage to arrive at a price. Rather,
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2. Does Spirit Airlines employ good-value pricing or value-added pricing? Explain.
Without question, it – -added pricing is a strategy that sets the price at
differentiate it from the competition?
There are many low-price airlines. Southwest is the most notable. And yet, Southwest has grown
Can Spirit keep executing its pricing strategy and continue to grow and be profitable? It would
5. What changes if any would you recommend that Spirit make?
Many students will say that Spirit should focus on providing friendlier customer service and
Teaching Suggestions
Before students read the case, lead them in a discussion by asking them the following questions:
What kind of things do you like in an airline? On a flight? (Students will likely name all
kinds of different niceties).