Analysis On The Cost Management Of Spring Airlines Based On Value Chain

Recent years,influenced by the public policy and domestic macroeconomic development trend,more and more capital entered in to the LCC field.This paper chooses the most representative company in LCC field,Spring Airlines,as the research object.We study the current cost management and the sustainability of low-cost operation model.Based on these studies,we can give some advice to other domestic LCC enterprises.Using the value chain study frame,this paper analyzes the cost management of Spring Airlines from the global perspective.We pay more attention on the profitability and the upstream and downstream relationship of company operation activities,which offers new idea to cost management analysis.In this article,we use the comparative analysis and ratio analysis methods and combine the qualitative analysis with quantitative analysis.Using the data from 2013-2015 annual reports of Spring Airlines and other listed enterprises,we analyze the change of Spring Airlines' cost indexes and compare them with industry level.For external value chain,we focus on Spring Airlines' control of internal cost.That is,how dose Spring Airlines squeeze its cost as possible?As for the internal value chain,we pay more attention on the value-add of Spring Airlines.In other words,we intend to find the profitability and sustainability of such low-cost operation model.At last,this paper concludes the weakness of Spring Airlines and give related suggestions.Study results are as follow:like other domestic airline companies,the Spring Airlines'aircraft use cost,fuel cost,maintenance cost,landing fee and civil aviation development fund cost are hardly to be further compressed.However,through improving the daily utilization rate and increasing seating capacity,the Spring Airlines largely decrease its unit cost.At the same time,Spring Airlines continually optimizes its marketing channel and increase the R&D investment on information technology,which makes its period expenses much lower than the industrial level.However,it is remarkable that the room for Spring Airlines to purely rely on low-cost operation is narrow.The subsidy takes up about half of its performance,and space are less to reduce the rigid costs.Faced with these problems,Spring Airlines continually deepens and extends its low-cost business model.By increasing the inputs on international flights and other business,Spring Airlines' low-cost business model gains sustainable development.