Spirit Airlines Incorporated (NASDAQ:SAVE) and SAVE stock appear well-positioned for growth. The Miramar, Florida-based carrier has enjoyed lower cost and higher growth than its peers, including its much-loved rival Southwest Airlines Co (NYSE:LUV).

SAVE stock has exhibited volatility in the last few years; however, it has recently begun trending upward. This uptrend, along with industry-leading growth numbers, position the stock to fly even higher.

Spirit Succeeds With Its ‘Ultra-Low-Cost’ Strategy

Spirit has taken the “no frills” concept to new levels, so much so that some classify the airline as an “ultra-low-cost carrier.” The strategy employed by SAVE means that when customers buy a plane ticket, a seat on the plane is all that’s included. Checked luggage, carry-on bags, even purses and bottles of water all involve added fees.

Where SAVE has outperformed its competitors is in the growthdepartment. Over the past year, Spirit grew its revenue passenger miles (RPMs) by over 20%. Legacy carriers such as American Airlines Group Inc (NASDAQ:AAL), Delta Air Lines, Inc. (NYSE:DAL) and United Continental Holdings Inc (NYSE:UAL) grew this metric in the single digits. Even traditional low-cost carriers such as Southwest and JetBlue Airways Corporation (NASDAQ:JBLU) did not grow RPM into the double-digits.

This growth has directly benefitted SAVE stock. Annual revenue growth has averaged 16.8% over the last five years. Net income has increased by 28.2% per year on average over the same period. Despite this growth, the stock trades at a price-earnings ratio of just over 13. Southwest, which currently experiences lower growth, trades at a P/E ratio of over 17.

Spirit Airlines operates all over the United States, as well as flying to destinations in Canada, the Caribbean and Latin America. Moreover, the airline has plenty of room to expand. Right now, it only serves 59 total destinations. While the U.S. is well-served, the airline has yet to reach a saturation point. Also, with only two destinations each in Canada and Mexico, SAVE has just scratched the surface on what it can offer in both countries. The airline also has similar room to expand operations throughout South America.

SAVE Stock Benefits From Creative Marketing and Low Costs

SAVE has also employed some unique marketing strategies. For only $59.95 (and $69.95 per year in future years), customers can join the $9 Fare Club. This club allows exclusive access to discounted airfares and vacation packages, as well as 50% off bag fees. United blamed this program for reducing its walk-up sales by 80-90% in just a week.

Like Southwest and JetBlue, SAVE only utilizes a few aircraft types. All of Spirit’s aircraft are built by Airbus. Its older planes are mostly Airbus A319-100 aircraft. Those aircraft are being retired. The A320-200, A320neo, and the A321-200 will be its only aircraft in the future.

Spirit has also succeeded in keeping other costs low. According to planestats.com, costs per available seat mile (CASMs) in 2016 amounted to 7.2 cents. This compares favorably to Southwest, which has 10.8 cents in CASMs and JetBlue with CASMs of 10.2 cents. However, one unknown cost could still hurt SAVE stock — pilot salaries.

Cost Issues Remain

Pilot issues have plagued the airline for years. A strike in 2010 led to 850 flight cancellations. According to Forbes, captains with ten years of experience make $100 less per hour flying for Spirit than for United. Moreover, most of its competitors have agreed to increase pilot pay. This means Spirit will likely have to raise pilot pay to retain and attract pilots. Given the company’s structure, it’s likely the added cost will fall on customers. Where Spirit’s costs will fall after an agreement with pilots is finalized remains to be seen.

The labor cost issue, as well as fuel costs that are higher than at any time since the energy price slump, present negatives to SAVE stock. However, the stock appears to have established a floor in the mid-$30s per share. At its current price in the low $40s, the stock appears poised to enjoy more upside in the near term.

Final Thoughts on SAVE Stock

With this uptrend and the company’s growth, the SAVE stock price should grow along with it. The airline has achieved higher growth and lower costs than its peers. Moreover, its “ultra-low-cost” strategy has appealed to a wide variety of travelers and has stolen market share from its competitors.

With the added business, SAVE has steadily added routes, planes and new destinations. Likely increases in labor and fuel costs loom over the stock. However, with more routes, destinations and travelers “catching the Spirit,” the airline has positioned itself to rule the ultra-low-cost niche.

If one wants a position in the airline industry and SAVE stock specifically, now is a good time to begin boarding.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks.