Spirit Airlines plans new technology push to grow ancillary revenue

After experiencing some rough patches in its non-ticket revenue performance, Spirit Airlines is on an upswing in that metric, and the company plans to further leverage technology to improve its ancillary revenue performance.

The airline’s average non-ticket revenue per flight segment fell 4.4% year-on-year in 2016, but rebounded in 2017 with growth of 2.2% to USD53.

“One of our largest competitive advantages is our ancillary revenue production, which accounts for roughly half of our revenue production,” Spirit chief commercial officer Matt Klein recently concluded.

During the last couple of years, Spirit Airlines has been engaging in dynamic pricing of seats and its bundled offerings, and those efforts was among the primary drivers of improvement in its non-ticket revenue performance for 2017, including a 3.8% rise year-on-year in 4Q2017.

Mr Klein explained Spirit has bought some technology in-house to improve pricing of its ancillary products, and as the airline moves through 2018, it plans to make improvements to its website to allow the airline maximise product merchandising.

Additionally, Spirit plans to make enhancements in 2018 to its mobile app launched last year to better leverage merchandising and push notifications. Presently, the app offers basic functionality including checking for flights, access to boarding passes and checking flight status.

Spirit was arguably late in embracing mobile technology, but the airline is adopting a philosophy to operate “more like an e-commerce business and think about how we are in the digital age and how our customers want to be communicated with, and how they want to receive offers”, Mr Klein explained. He acknowledged all those things take are “a lot to take in and a lot to digest”.

The airline is taking an understandably cautious approach in enhancing its mobile app during 2018. It is not offering a definitive timeline for the roll-out of those enhancements other than indicating they will be available late this year. “I don’t want to over promise on that because we’re really just now getting moving that added functionality,” said Mr Klein. “When it arrives and when it’s there, we’ll be able to talk about it and give you better visibility on that.”