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 Contd...

The Recipe for Low Fares

Spring followed a strategy of cost focus. The airline served a class of flyers who looked for functional and efficient service rather than luxury. It did not aim to satisfy all segments of the market. The airline's operational policies supported its strategy of cost focus...

The 'Barstool-Style' Seats

With its success in maintaining low costs and making airfare cheaper for passengers, Spring found itself facing an increase in passenger demand. In a bid to cope with the rising number of passengers, it ordered 14 new planes from Airbus...

Operations Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

Low-Cost - The Formula for Success

Experts opined that Spring had proven the effectiveness of its low-cost business model in the domestic market to potential investors, patrons, and skeptics by posting a profit during the turbulent times in the aviation industry...

The Competition

Industry observers opined that the competition was expected to intensify for Spring since LCCs from Thailand and Korea were planning to launch international flights to cities in China at higher discounts...

The Road Ahead

While most of the airlines continued to post losses, Spring set a new record by posting earnings of 15.87 million RMB on sales of 429 million RMB for the first quarter ended March 31, 2009. In view of its positive results, the carrier had aggressive plans to double the net profit to 40 million RMB (US$ 5.9 million) by the end of 2009...

Exhibits

Exhibit I: A Note on the Chinese Aviation Market
Exhibit II: Price Comparison with Other Airlines (2006-07)
Exhibit III: A Schematic Diagram of Airline Ticket Distribution in China
Exhibit VI: An Indicative Image of the Type of Seat Proposed by Spring
Exhibit V: Cost and Performance of Spring
Exhibit VI: Spring's Profitability Compared to Leading LCCs

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