Spring Airlines: China's Low-cost Airline

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Case Details:

Case Code : OPER085
Case Length : 27 Pages
Period : 2005-2009
Organization : Spring Airlines Ltd.
Pub Date : 2009
Teaching Note :Not Available
Countries : China
Industry : Aviation

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Background Note

The history of Spring dates back to 1994, when Spring International Travel Service (Spring International), a Shanghai-based travel agency set up in 1981, won the award for the best travel service provider in China...

Operating LLCs a Huge Challenge in China

Spring had its share of problems. Though the civil aviation industry in China had been growing at the fastest pace in the world, some experts felt that the environment in the country was not really suitable for LLCs (Refer to Exhibit I for a brief note on the Chinese aviation industry)...

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Overcoming Obstacles

When Spring planned to enter the Chinese aviation market with its low-cost business model, the CAAC remained divided on several issues. One of the major obstacles faced by Spring was to convince the authorities on issues related to safety...

Pricing Controversy

In late 2006, Spring adopted an innovative way to promote its airline. The airline which sold tickets at 30 percent of the price of a full service airline (FSA), announced that it would sell 10 percent of its tickets at a promotional price of 1 RMB...

Succeeding Low Fares and by Keeping Costs Down

In 2007, the airline's net profit increased to 70 million RMB from 20 million RMB in 2006. The airline's passenger boarding was at 1.7 million with an average load factor of 95 percent...

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