Story and Photos by: Chris Sloan
MIAMI – Spirit Airlines, the largest ULCC in the United States, has been on a blitzkrieg of route expansion as of late, adding new dots to its network map including Indianapolis, Austin, Raleigh-Durham, and Charlotte, while simultaneously establishing an international focus city and base in Orlando. The surging airline has been on a mission to stimulate traffic in high-growth and high-fare markets, with fortress hubs keen in its sights.
Today, Spirit disclosed its 74th destination, with the announcement that Bob Hope Burbank / Hollywood Airport (BUR) will join the network beginning June 19th, with non-stop flights three times daily frm Las Vegas McCarran International Airport (LAS).
The new route is a more specific move than it seems at first glance. Spirit becomes the first ULCC to enter the convenient, but aging Hollywood / Burbank Bob Hope Airport. John Kirby, Spirit’s VP of Network Planning says “We’re always looking for opportunities. The LA Basin is huge, and it’s difficult to offer service to the entire area from just one airport. Burbank is a constrained airport, and we wanted to get in early before there’s not an opportunity in the future.”
Further, Burbank fits Spirit’s
Burbank becomes Spirit’s second destination in
Las Vegas is Burbank’s number three destination with 330,320 passengers in CY2017-2018. The “party flights to Sin City” are legendary with celebrities and regular folk alike. Spirit’s competitive set between BUR and LAS is nine daily flights on market dominating Southwest and seven daily flights on Jet Suite X flying 30 passenger E-135s out of a separate FBO terminal.
Las Vegas was chosen as Burbank’s first destination according to Kirby because the route “has an over fifty cent yield which is attractive to a ULCC. Couple that with a low cost airport and it seems like a no brainer. We look for markets that are overpriced and underserved. The Burbank to Las Vegas market was twice the size a decade ago when there was more competition.”
Data provided by Kirby confirms this: Average fares increased from $76 in 2007 to $112 in 2018, while average passengers per day dropped from 1,074 to 540.
This isn’t just another new route announcement. The significance of Spirit adding BUR to the network can’t be understated. Spirit is invading an airport where Southwest reigns supreme with 71.5% of the market and 3.8 million passengers annually.
Southwest has served Burbank since the early 1980s, fending off many other competitors who have tried and failed to enter the market. The Dallas based airline has been called a “California airline that just happens to be based in Texas”.
Spirit’s low cost ambitions for Burbank and the Los Angeles basin extend well beyond thrice daily flights to Las Vegas. Will Spirit take on Southwest, Alaska, United, and Delta in the epic Intra California and West Coast dogfight that is pressuring all the competitors? The top destination from Burbank is Oakland, a monopoly held by Southwest with 423,000 passengers in CY 2017-18.
It appears likely that Spirit could challenge Southwest to OAK where Spirit is ramping up service. Kirby, who was at Alaska prior to joining Spirit, is non committal to entering the intra-California and West Coast fray but says though Spirit is “focused on leisure markets first. We stimulate the market. We go where people want to go so that will naturally lead us to growing in leisure markets. We think there is a tremendous opportunity in the lower 48.”
BEAUTIFUL DOWNTOWN BURBANK, BUT NOT A BEAUTIFUL AIRPORT (YET)
For years, the Hollywood Burbank / Airport authority has attempted to replace the small and overcrowded terminal with a new terminal to replace the existing throwback 1940s era facility, where passengers still board from the tarmac level terminal by air stairs. Indeed, the historic airport was LA’s gateway International airport until 1948 until being replaced by LAX. The terminal’s basic configuration is still recognizable 70 years later. Historically, Burbank was the home of Lockheed and the assembly line for the iconic Constellation.
The current terminal is so outmoded that the center line of one of its runways are located within 250 feet of the terminal, where the FAA now dictates 750 feet. Residents have objected to the new facility on the grounds of noise and expanding traffic.
To quell local protests, the airport authority’s new terminal would limit the facility to 14 gates and continue noise abating traffic restrictions including over-night curfews. The airport authority has embarked on an aggressive campaign to collaborate with and persuade the municipal constituencies of the new terminal. If it’s built, Spirit is confident that airport costs will still fit Spirit’s ULCC model.
Nevertheless, this busy airport is considered a true alternative to LAX. BUR punches above its weight due to its
SPIRIT DOUBLING DOWN IN SIN CITY
Spirit asserts the BUR flights will feed via LAS to more than two dozen other Spirit destinations including Austin, Columbus, Dallas / Fort Worth, Pittsburgh, Minneapolis / St. Paul, Indianapolis, Fort Lauderdale, Tampa, Baltimore, New Orleans, and Philadelphia. The service will complement Spirit’s existing thrice daily service from Los Angeles International Airport (LAX) to Las Vegas.
Spirit has been rapidly expanding in Sin City. According to DOT data from November 2017 to December 2018, the ULCC is now the second largest carrier at LAS with over four million seats on sale annually and a market share of over 9.5 percent, overtaking number two-market carrier American – a vestige from the US Airways / America West night hub days. Still, Southwest dominates LAS with 40 percent of the market.
Spirit now averages approximately 55 daily departures from Las Vegas, offering nonstops to 28 cities. As of July 2019, Spirit will have grown nearly 50 percent in Las Vegas compared to its capacity two years ago. In 2018, it became LAS’ fastest growing carrier. For Spirit, LAS isn’t just a leisure based O&D market but Kirby says “a solid gateway for the Western Region providing greater lift.”
BEYOND BURBANK AND BEYOND: A ROLL OF THE DICE?
The ULCC, though consistently absurdly profitable and innovative, has often been the target of scorn by its customers and shareholders alike. These days, Spirit seems to be doing a lot of things right.
Even with a stunning increase in capacity of nearly 30 percent, the stock is up over 40 percent from its trough. The airline wrapped up the last quarter of 2018 with the second highest operating margins in the U.S.
From a customer perspective, it has a completion factor of better than 99%. Since October 2018 has been ranked in the top three of all U.S. carriers in on-time performance, now at 85.1 percent in the last quarter and 81 percent for the full year. The ULCC is ranked among the best for fewest bags lost. All the while operating the youngest fleet of aircraft in the U.S. at an average age of less than five years.
The airline continues on its quest to become more customer friendly with its highly touted WiFi service, focus on culture and service program called “Invest in the Guest”, operational reliability improvements, and a refreshed brand with big news coming.
These initiatives, once a contradiction to the airline formerly unknown as “Home of the Bare Fare” are translating into higher Net Promoter Scores even though the airline still has a high level of complaints compared to its competitors (save Frontier and Allegiant) to the DOT of three per 100,000.
The airline still has a long way to go for its negative perception to catch up to reality. Will Spirit be able to keep up with its voracious appetite for growth?