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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"Spring's business model is hard to duplicate among other carriers, but it proves highly successful." ¹

- Huang Jinxiang, analyst, Guosen Securities², in April 2009.

"All the experts and insiders say a budget airline won't succeed in China. But if Western companies can manage it, why can't the Chinese?"³

- Wang Zhenghua (Wang), Founder, Chairman, and CEO, Spring Airlines Ltd., in February 2006.

Springing a Surprise

In June 2009, even as several airlines were coping with turbulent times in the aviation industry, Shanghai-based low-cost airline, Spring Airlines Ltd. (Spring) was facing a different problem: how to meet the increasing passenger demand for its flights. The airline operated with a fleet size of 13 planes and was struggling to keep up with passenger demand.⁴ To cope with the demand, the airline ordered 14 new planes from Airbus Industrie⁵ (Airbus) in early 2009. However, the new fleet was to be delivered only by 2010.⁶ To tackle the problem at hand, the airline began seriously considering the idea of offering standing-only tickets to passengers on its flights.

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1] Wang Yin, "Price Cuts Keep Spring in the Black," www.mp3-mp4-ipod.cn, April 24, 2009.
2] Founded in 1989, Guosen Securities is a leading financial services firm in China that offers an array of products in brokerage, asset management, investment banking, and research.
3] Don Lee, "In China, Low-Fare Flying is Seriously No-Frills," http://articles.latimes.com, February 19, 2006.
4] Wang Yin, "Spring Airlines Plans Shanghai Float Next Year," www.chinadaily.com.cn, July 30, 2009.
5] Airbus Industrie is the world's largest manufacturer of commercial passenger aircraft, formed by a consortium of British, German, and French airplane companies backed by their respective governments. The company was launched to challenge Boeing's monopoly in the aviation industry.
6] "Spring Airlines Considers Selling Standing-room Tickets," www.cctv.com, July 28, 2009.

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