Low-cost brands better placed to deal with COVID-19 challenges than high-priced brands

New Ideas in MarketingEssential news for marketers, summarised by YouGov
March 18, 2020, 3:56 PM UTC

Due to coronavirus, airlines are expected to slash prices to compete for the remaining customers.

This piece argues low-cost brands like Spirit Airlines are more robust amid coronavirus outbreak than their high-priced rivals, especially in the travel sector. A company, which is always geared up for operating at low cost, is better positioned during such situations.

Spirit Airlines’ Ted Christie said their company’s model is to deliver bottom-line performance at low price-point, making it less difficult for them to tackle this sudden fall in demand in both corporate and domestic travel. He also added the issue is not selling services in low fares, but to sell at a “profitable level.”

The author contends that premium airlines often rely on higher-priced business travel to offset the lower cost of consumer travel. But Spirit’s model historically offers a better profit.

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