Spring Airlines’ Low Cost Strategy Studies

In1970s, with the opening policy of aviation industry in USA, southwest airlines, alow-cost carrier, grew rapidly and became one of the most successful low-cost airlines inthe world. After that, more low-cost carriers were founded in Europe and Asia, and manyof them achieved great success. In Asia market, low-cost carriers have made remarkablesuccess during last ten years, and become the focus of global aviation industry.The success of low-cost carrier is the success of total-cost leadership strategic approachof the theory of Michael E.Porter’s Competitive Strategy. Based on five competitive factors:industry competitors, substitutes, potential entrants, suppliers and buyers, Michael E.Portalpromoted three strategic approaches:1.Total-cost leadership;2. Differentiation;3.Focusing. Total-cost leadership approach is also called low-cost strategy. Only when acompany controls its total cost better than competitors, and the advantage can further lastfor long term, the company could be more competitive in the market with the strengths ofits cost control ability. The company who can control its cost at every process of itsmanagement, the one could possibly win the leadership of total cost. By practicingtotal-cost leadership strategic approach at their management, low-cost carriers get morecompetitiveness than traditional airlines.Low-cost carrier model became possible in China only after Chinese government’sopening the door to domestic private capital in Y2004. As the only low-cost airlines inChina, Spring Airlines insisted on total-cost leadership orientation in the market, developedits business rapidly during competing with other airlines. With the mission of Make flyingaffordable to everyone, Spring Airlines made profit every year since Y2005. Learningexperience from foreign low-cost carriers, and acting locally, Spring Airlines adapted itstactics during operation, but not just simply copy the model from others. Because of SpringAirlines’ endeavor, the concept of low-cost model is being accepted by more and morepublic today.This thesis is analysis the case of Spring Airlines. The author analyzes the environmentand the competitiveness of aviation industry, based on which Spring Airlines makes outtheir specific low-cost strategy. The author further expounds the difficulties and challengesthat Spring Airlines faced when practicing low-cost model in China, then gets to theessence of Spring Airlines’ unique low-cost model, abstracts the essence of success andanalyzes the experience. Lastly, the author analyzes the development trend of the industry,and proposes his suggestion for low-cost carriers’ development.