Assessment of Spirit Airlines' External Environment



Assessment of Spirit Airlines' External Environment

Trends and Threats faced by Spirit Airlines

The fierce competition in the airline industry is a threat to Spirit Airlines. There are several organizations in the airline industry that are providing enhanced customer experience to their customers by dividing the customers into different groups. They provide different services based on the segmentation of their customers. These advancements may impact the business of Spirit Airlines. The spirit airline currently holds a competitive advantage by providing low fares of air travel. However, it is not a reliable strategy and it may affect the growth and development of the organization and the profitability of the business (Spirit Airline Inc. ,2011).

Limited control over the costs of the business due to low fare and cost structure is another threat faced by Spirit Airlines. Volatility in the cost of fuel and significant disruptions in the fuel supply due to the affects of hurricanes or other uncertain events in the economy and gulf coast area may affect the business of Spirit Airlines. If the airline is subjected to any kind of unforeseen event such as emergency situation and accidental incident that involves aircraft, then the business has to suffer from loss (Spirit Airline Inc. ,2011). Other potential threats might include terrorist attacks, costs related to the claims of passengers, permanent or temporary loss of aircraft service due to accident or other severe incident affecting aircraft and replacement or repair of a damaged aircraft (Hillman, 2000).

The government regulations have a high impact on the organizations operating in airline industry. The airline industry is a highly regulated industry and the federal government has profound influence on the businesses of airline industry. Being in the business, spirit airline has to deal with the economic issues in the external environment that influence the regulatory authorities such as FAA and DOT that regulates airlines in united states. These authorities oversee the air transportation issues such as route authorization, competitions ales practice, advertising, disabled passenger transportation, baggage liability etc. there are several rules imposed by the federal governmental authorities which creates an intense external environment for Spirit Airlines. The authorities could issue the certificates to the airlines to provide public convenience that are required by the travelers going for air transportation (Smith et al., 1991).

The spirit airline is also affected by the environmental regulations imposed by the state, local and federal laws to protect the environment through controlling the aircraft engine emissions, disposal or discharge of chemicals and materials by the airline, noise emissions of aircrafts etc. the EPA (environmental protection agency) of united states regulates the airlines to control those areas which affect the air quality in united states (Lynes & Dredge, 2006). There is a high concern regarding the environmental protection in united states including the greenhouse gases and climate change which leads to the taxation or additional regulations of emissions by aircrafts inside the country and internationally. The availability of fuel and the prices of the fuel could ...