August 28, 2012 Spirit Airlines expands again
Spirit Airlines is another one of those Ultra Low Cost Carriers that live in the margins of the U.S. Aviation market. Perhaps best known for their cheeky advertising and $9.00 fares that rarely add up to $9.00; they have been frequent targets of DOT enforcement for violating fare disclosures. Today however, they are in the news for a different reason. Via press release, http://ir.spirit.com/releasedetail.cfm?ReleaseID=702720, they have announced service from Houston to Chicago and Las Vegas, joining their existing service to Dallas.
Spirit has been expanding their service out of Dallas for some time now. It is surprising that Sprit would announce service not just from Houston but to a major operation for Southwest and a hub-to-hub route for United. People who write aviation blogs and have opinions about the effects of low cost expansion will tell you that this will have no real impact on United’s or Southwest’s operation in Houston. I think those people are wrong. It’s true spirit makes its own markets. They target people who do not use air transport and would not without Spirit otherwise travel. However, there will be some leisure travel that will move to Spirit from both WN and UA. WN is in the middle of dramatically increasing its Houston operation while UA is in the process of trimming theirs. Spirit will continue the trend of draining passengers away from United. This drain will further decrease the profitability of UA’s Houston operation. Whether or not this decrease will accelerate or increase UA’s pull back remains to be seen.
Spirit has largely gone unnoticed by the legacy carriers. Their aggressive expansion over the past couple of years suggests that they are fast becoming a force to be reckoned with. UA and WN have for the most part peacefully co-existed in Houston. That balance that existed before the merger is largely gone with United ceding ground and markets to Southwest. With Spirit’s entry into the Houston market this suggests that the Houston market will rebalance again.