Flexible marketing strategies, coupled with extreme cost control, allow Spring Airlines to sell the cheapest tickets and make the most money.
Text |Deng Xia, Wang Jingyi.
Edit |Wang Jingyi.
8 yuan from Shanghai to Osaka", which made Spring Airlines popular again.
This low-cost airline uses **, which is cheaper than a takeaway, to realize the "poetry and distance" of migrant workers. Last year, it made a huge profit of 2.1 billion to 2.4 billion yuan, ranking first among Chinese airlines, and even more than the profits of the other six listed airlines combined.
Selling the cheapest tickets and making the most money, Spring Airlines is the perfect way to describe it.
Spring Airlines told CarCaijing that the 8 yuan** ticket campaign was to increase sales of off-season flights. At present, the peak travel season for the Spring Festival holiday has passed, and there is still some time before the next peak season for cherry blossom viewing in Japan. At this time, some one-way ** activities from Shanghai to Japan will be released to help the sales of flights from the overall consideration of the round-trip journey.
The flexible marketing strategy helped Spring Airlines achieve "high load factor and high aircraft utilization", and continued to increase revenue; The cost control of "single model, single cabin" makes its cost lower than that of other airlines.
The data is more proof that Spring Airlines earns more and spends less. In 2023, Spring Airlines carried more than 24 million passengers, with a load factor of 894%, the passenger load factor leads the industry; According to SDIC**, the cost per unit ASK (available seat kilometer) in 2022 is 038 yuan, lower than the average of the three major airlines 078 yuan.
Half of the money is earned, and half is saved. "Spring Airlines founder Wang Zhenghua's classic quote tells everyone that making money is so simple.
8 yuan to go to Japan, limited time and limited quantity
On February 19, some netizens found that the minimum price for buying a ticket for Spring Airlines from Shanghai Pudong International Airport to Osaka Kansai International Airport in Japan in mid-March was only 8 yuan.
In Shanghai, 8 yuan can't even buy a breakfast for a migrant worker, but can you buy a ticket to Japan?
Figure Network. In this regard, Spring Airlines told Travel One Passenger (ID: Carcaijing) that the ** air ticket activity did happen, but it only lasted for a week or two, and it has now ended. It can also be found from the official ** of Spring Airlines that there is no longer an 8 yuan ** ticket.
As soon as the event was launched, some netizens commented: "8 yuan when you go, 8000 when you come back." It is implied that there is a lot of marketing behind this kind of ** ticket. The reality is certainly not so exaggerated. But it is undeniable that at this time, the launch of ** air tickets, airlines have their own considerations.
Spring Airlines said that the 8 yuan** ticket campaign is precisely to increase the sales of off-season flights. At present, the peak travel season for the Spring Festival holiday has passed, and there is still some time before the next peak season for cherry blossom viewing in Japan. At this time, some one-way ** activities from Shanghai to Japan will be released to help the sales of flights from the overall consideration of the round-trip journey.
In fact, Spring Airlines' introduction of ** tickets is not new.
In 2022, Spring Airlines launched the virtual platform "Infinite Space", which gathers ** air tickets from all over the world at home and abroad, with fares of 59 yuan and 99 yuan for the most. ** air tickets as low as a few yuan have also appeared before, and last month, a netizen found that Spring Airlines' ** air tickets from Shijiazhuang to South Korea cost only 9 yuan for a one-way trip.
Figure: Spring Airlines applet.
Spring Airlines told CarCaijing that this type of ** ticket often has some common features: first, the duration of the event is short, only 1-2 weeks; Second, there are restrictions on the departure date you can choose, for example, the 8 yuan launched this time from Shanghai to Osaka, the optional time is from late February to mid-March, only three weeks, the time is relatively short; Third, the one-way nature is more obvious, and it is generally a one-way ticket.
The ticket price is 8 yuan, and the tax is 402 yuan?
It is important to note that the fare does not equal the full cost of the passenger's actual boarding. For example, on the ticket from Shanghai to Osaka, under the big word of the ticket price of 8 yuan, there is a line of small letters that says "tax 402".
There are three parts of the tax, one is the international tourist tax stipulated by Japan, the second is the fuel surcharge, which will vary according to the distance, and the third is the airport tax, which is different from airport to airport. Li Hanming, a person in the civil aviation industry, told a passenger (ID: carcaijing).
As we all know, in addition to the fare marked by the airline, the air ticket also has the fuel cost of the machine. In the case of international air tickets, passengers may also need to pay additional taxes such as entry tax, departure tax, transit tax, etc., in addition to these two. The specific types and amounts of fees vary from country to country, and are generally collected by airlines when passengers purchase air tickets.
Taking Japan as an example, in 2019, Japan officially implemented the "International Tourism Promotion Law", announcing that foreign tourists and Japanese citizens visiting Japan will be subject to an exit tax of 1,000 yen (about 48 yuan) per person when leaving the country. This fee is included in all passenger tickets departing from Japan, except for children under the age of two, transit passengers destined for other countries, and flight attendants.
In addition, some airports in Japan also charge an international passenger service facility usage fee and a passenger security service fee, which are also charged at the same time as the purchase of air tickets.
Screenshot of All Nippon Airways 2019 notice.
Source: The company's official website.
The above fees need to be paid regardless of whether you choose low-cost airlines or general airlines. The reason why low-cost airlines are "cheap" is that they achieve the greatest degree of differentiated pricing.
If you don't need checked baggage, don't need meals...Then the cost can stop there. However, if there is some other need, the passenger will also need to "pay as you go" for each service.
Some netizens shared that they bought the 8 yuan ** ticket, plus taxes and 20kg luggage, and the final round-trip landing price was 890 yuan.
Sell the lowest ticket price and make the most profit
Whenever low-cost airlines launch eye-popping ultra-low** tickets, there are always netizens who are worried: "Do airlines really make money?" In this regard, Spring Airlines' financial report said that everyone was more worried.
Contrary to the imaginary "tight" financial situation of low-cost airlines, low-cost airlines represented by Spring Airlines are actually "rich".
On January 31, Spring Airlines (SH601021) announced that the net profit attributable to shareholders of listed companies in 2023 is expected to be 2.1 billion yuan to 2.4 billion yuan. Compared with the same period last year, it will achieve a turnaround.
Spring Airlines' profitability is "far ahead" among the seven listed airlines in China, and even exceeds the other six combined.
According to the announcements of various companies, China Eastern Airlines, China Southern Airlines, China Express Airlines, and Air China will still lose money in 2023, with losses of 6.8 billion, 3.5 billion, and 9300 million and 900 million yuan. Hainan Airlines and Juneyao Airlines turned losses into profits, with profits of 4500 million and 8800 million yuan.
How to sell the cheapest tickets and make the most money? The classic quote of Wang Zhenghua, the founder of Spring Airlines: "Half of the money is earned, and half is saved", points out the secret of high profits.
High load factor and high aircraft utilization are the business objectives pursued by Spring Airlines.
In 2023, Spring Airlines' load factor for the whole year will be 894%, ranking first among 7 listed airlines, compared to 733%-83.With load factors ranging from 5%, Spring Airlines is clearly ahead of the curve.
In addition, according to official disclosures, Spring Airlines will carry more than 24 million passengers in 2023, an increase of 77 compared to 2022 and 2019, respectively4% and 78%, the highest since the company set sail.
Spring Airlines' high passenger traffic in 2023 is not only due to the overall recovery of the industry and the high attractiveness of low-cost air tickets to **sensitive passengers, but also the continuous optimization of the network structure.
Zhongtai** pointed out that although Spring Airlines' market share in first-tier cities decreased by 01%, but the sinking second- and third-tier cities have brought new profit growth points to the company. In the summer and autumn of 2023, Spring Airlines' domestic schedule share in first-tier and second-tier cities increased compared to 2019, respectively. 91%。
The second- and third-tier cities that are actively investing in capacity not only allow Spring Airlines to receive more subsidies, but also develop a larger market "blue ocean" for the company. From 2015 to 2019, Spring Airlines' passenger throughput CAGR (compound annual growth rate) in Shijiazhuang, Yangzhou, Ningbo, Nanchang and other bases was significantly higher than the industry average.
Entering 2024, Spring Airlines told CarCaijing that the current capacity arrangement, total number of flights and passenger number of domestic routes have far exceeded those in 2019; International routes are still recovering steadily, subject to factors such as the strength allocation of foreign airports, from the perspective of the Spring Festival in 2024, the capacity will recover to about 6% of 2019.
Earn while saving
Good performance, on the one hand, is revenue, and on the other hand, cost control.
In terms of revenue, Spring Airlines is also adept at providing various "diversified services". Cabin meals, checked baggage allowance, seat selection services and other items that other airlines may be free or redeemable for points are all opportunities to make money.
In the first half of 2023, Spring Airlines' main business revenue recorded 786.1 billion yuan, and other business income recorded 16.9 billion yuan.
In terms of "picking", Spring Airlines has achieved the extreme. Specifically, it is the "two orders (single model, single cabin)" model that has always been adhered to.
The Airbus A320 family is the "old buddy" of Spring Airlines. Unlike other airlines, which are equipped with a wide range of aircraft, Spring Airlines' entire fleet uses A320 series narrow-body aircraft.
With a single aircraft configuration, Spring Airlines has maximized the scale effect in terms of amortizing non-fuel costs such as aircraft maintenance. In recent years, the newly introduced Airbus A320neo model has further helped the company save about 15%-16% of theoretical fuel consumption, so that Spring Airlines has basically achieved a cost advantage in fuel consumption.
In addition, Spring Airlines only offers a single economy class. Although it sounds a bit "cold", some netizens ridiculed it as a "green train" in the aviation industry, but in terms of cost control, it has brought tangible benefits to the company.
The space freed up by business class and first class allows Spring Airlines to provide about 10%-15% more seats under the same aircraft type than other airlines, and also amortizes the company's already low unit cost to "thin and thin".
It's abstract to say, but the data is more intuitive. In the first half of 2023, Spring Airlines spent 29.6 billion yuan, and China Southern Airlines was 48500 million yuan, which is 16 times that of Spring Airlines.
Of course, China Southern Airlines, as the largest airline in China, has a fleet several times the size of Spring and Autumn Airlines. As of the first half of 2023, Spring Airlines has a fleet of 120 aircraft and China Southern Airlines has a fleet of 897 aircraft.
If the expenses are amortized on each aircraft, Spring Airlines spends an average of 2.47 million yuan on aircraft and engine maintenance, and China Southern Airlines spends 5.41 million yuan, twice as many as Spring Airlines.
In terms of aviation fuel costs, Spring Airlines spent an average of 20.93 million yuan on flights, while China Southern Airlines spent 25.41 million yuan on flights, the latter also slightly higher.
Spring Airlines told CarCaijing that in 2023, non-fuel costs have recovered to the same level in 2019, laying a good foundation for the recovery of the whole year.
On the one hand, "open source", on the other hand, "throttling". Spring Airlines uses its strength to tell everyone that low-cost airlines can also make money.