All right, good afternoon, everybody. Thanks for joining. We have Spirit up next. Spirit really pioneered the ultra-low-cost model here in the U.S. and really demonstrated a highly profitable model in kind of serving the very price-sensitive traveler with a much lower cost structure than its competitors. In kind of recent years, what you've seen Spirit do is kind of make changes to its network and operations and has really improved on-time performance and customer experience while maintaining its cost advantage. Also, as you look, they've been making investments in their systems, and you're just kind of seeing the early stages of just this kind of merchandising capability, which we're quite excited for. Clearly, they have a lot of different topics here to cover today, but we're excited about the kind of the runway for earnings and capacity growth at Spirit.
Very excited to have with us here today Ted Christie, Spirit's CEO, to present more on the story. I'll turn it over to Ted.
All right. Thank you, Savvi. Good afternoon, everyone. Welcome to Florida. We've got a presentation here talking about the opportunity at Spirit, the long-term view. Before I get to that, it probably makes sense to address at least the elephant in the room around the noise around the virus and talk a little bit about what we're seeing. The way we would look at things, first of all, is it's too early to draw any specific conclusions. We don't really have an update to the company's formal guidance today because the news is obviously developing in real time as we're seeing it happen over the last few days. We would expect that for a variety of issues, either because of issues at corporate travel level and the need to replace probably lost corporate demand, we're starting to see more lower fares in the marketplace than we had seen before.
To the extent that there is an impact in the near term, I think we would expect to see it on yield. However, with that said, traffic is still good. Anecdotally, I traveled over the last three days on seven different flights, and everything was full. The airplanes were full. The airports were full. I think at low fare levels, people are still traveling, which is great to hear, at least as it exists today. While we will continue to evaluate and monitor what happens over the coming weeks and how that may influence the quarter, we're clearly still very excited about what we're seeing in our market and longer term heading through the year.
I know there's been, throughout the course of the day, we've had a number of meetings and just had discussions about the resiliency of the airline business and where we sit today to the extent that this creates some sort of a change in the cycle and that the environment remains more challenged for a longer period of time. I think what I can say specifically about Spirit is that over the last decade or so, we've invested considerable time, capital, and energy in making this a business that is resilient through the cycle. In our view, there are a variety of things that you can look to in the Spirit model that will give some comfort as to our ability to navigate up and down cycles.
The first and most important aspect of the Spirit model that is so important is the cost structure of our business, living at the absolute lowest cost level in the industry. Over the course of history, if you look backwards in both growing times and more challenged economic times, the most resilient airlines are those that are at the lowest cost level. That is because low fare travel tends to be the most resilient and the stickiest. We believe that having the lowest costs in the business, which is true today, is one of the single most important weapons that we have in maintaining our resiliency through more challenged economic times.
In addition to that, the company has, over the course of the last 10 years, created tremendous amounts of balance sheet and fleet flexibility that give us the ability to react tactically to the extent that we think that would be necessary. Today, we operate a fleet of approximately 150 all A320 family narrowbody aircraft. Of those 150 or so, we own 27 of those aircraft outright. They are unencumbered and working well in our fleet today. That, in and of itself, creates tremendous flexibility both on the balance sheet level to the extent we wanted to increase the company's liquidity position. Those are unencumbered assets. More importantly, those assets are basically cash burn zero airplanes today from an ownership perspective and therefore can be in and out of our system pending changes in demand.
We also enjoy one of the most liquid balance sheets in the industry today on a metric basis. That has been an intentional move by us over the last decade or so to create a stable position to give us good negotiating leverage with our peers to make sure that we are insulated or self-insured against shocks, be those shocks be commodity price shocks or demand shocks or whatever you might say. I think that, in and of itself, also sets us up to be in a relatively good position.
When I take into account all of the factors that are a part of who Spirit is today, absolute very low cost, flexible fleet looking at how we operate today, and a strong balance sheet, I think we're set up well to weather any kind of an economic cycle that we face and in some ways to be able to take advantage when times can be more tough. That's our view on what's happening today. Clearly, this is a developing situation. I know you all are very curious about how things are going to transpire, and we can have some time for Q&A later.
For right now, I would transition and talk to you a little bit about the Spirit opportunity over the long term because nothing we see today changes our view that there is a tremendous opportunity in the lower 48 and the near-field international where we serve for us to continue to grow and expand the market and provide low fares and great service to more and more guests. What's most important and what we've learned the most about over the last three or four years is there is a virtuous cycle in the low-cost business. We have to be, in order to be a true low-cost operator, you've got to maintain and expand your relative cost gap against your competitors. That's what gives you your pricing power. That's what gives you your market opportunity.
We also have recognized and expanded our ability to improve our ancillary performance, which has been unique in the business. We'll talk some about the successes we've had there that actually puts us more in control of a component of our revenue. Today, it represents about 50% of our revenue is in the non-ticket line. We've had tremendous success in continuing to grow that on a unit basis. I mentioned a large growing market opportunity. When the company was first a newly minted public company in 2011, we were estimating at the time that there were somewhere in the neighborhood of 250 or so market opportunities for us to capture.
Over the last eight years or so, we have grown, and that market opportunity has grown faster than we have grown, such that now, by using the same math, we're still seeing in excess of 400 market opportunities to grow into. What that tells you is the model, which at the time was relatively new, has proven to have tremendous success, and our cost advantage has grown over that period of time, which has opened up more and more opportunities. I think what we've learned the most about over the last three years is this component of operational reliability. Now that we have proven that we have a sustainable growth engine with low fares, what we've really proven to ourselves is by inserting the value proposition, by delivering a quality product to our guests, we now have expanded further the opportunity to revenue manage our business.
When you take away the fact when you now insert yourselves in as a top-tier operator, this is no longer a guest feeling that they need to take a discount in order for a substandard product. Instead, what they're getting is tremendous value for a very low fare. All of that leads to a better brand positioning, better brand image, and all of these things then catapulting into this virtual cycle of an enhanced value proposition for both our shareholders and our guests. See if I can get this thing to move along. Okay, I mentioned operational performance. Over the last three years, the company has made significant strides in improving its operational performance, both in on-time as well as completion factor. Both of those things are the primary measures of operational performance.
We throw up a couple of slides here that show you how we did in 2019 as well as how we're doing so far early this year. You can see we, as was well discussed, had a challenge summer and some performance that did not meet our expectations in both on-time as well as completion factor. As we've kind of gone into in detail on our earnings calls and many meetings, we made the necessary adjustments. What we found is that the operational performance has rebounded back to levels that we expect. You can see those trend lines now looking very good into the fall. I can tell you the airline is running extremely well these days. We're still finding ourselves routinely in the top three or four in on-time performance.
I think our completion factor now is starting to shoot up to the point where we're in the top two or three every day. It is clearly the proof in the pudding that when we deliver a quality product, we can do it routinely. That is how we're going to deliver long-term value to our shareholders and our guests. The necessary changes that we made to both network and crew are working the way we expected. In addition to being a better operator, the next key to improving the overall value proposition to the people on board your airplane is to make the experience a little bit better.
We found that there are ways we can invest in our product that's going to make the experience our guests have both on board the airplane as well as their booking experience and their airport experience much more in line with what you would expect with an airline of our quality and do so in ways that's actually translating to benefit to the business. There are a few ideas that we outline here. For example, we just recently this year rolled out a new interior look for our airplanes with brand new seats, new color schemes that are much in line with the brand. What we also were able to do was deliver a brand new seat technology that improves usable space so that the feel on board the airplane actually feels like you're getting about 2 inches more of leg room.
Even though we set our pitch at about 28 inches in our coach product, it feels more like a 30-inch pitch, which is more like you would expect on a more premium carrier. In addition to that, those seats are weighing less than the seats that we have on our current fleet. It is actually a cost benefit to the business and a value improvement. Those are the types of things we are pursuing with self-bag drop at the airport, which is a much more seamless experience and a much more usable and engaging experience on board with the web and with our mobile application, which is, again, very good for guest experience, but also excellent for cost performance. All of this investment, better operations, improved guest experience, all of that has led to some very good accolades for the team.
Over the last year, we've won a number of awards and recognitions worldwide with CAPA and ATW, also being recognized as a four-star airline by APEX, which is unusual for an ultra-low-cost carrier. Clearly, the efforts we're making are being heard by both the folks that track it as well as by our own guests. Our guest satisfaction metrics are going up dramatically. Here's a quick look at the route network. As you can see, we've expanded dramatically throughout the U.S. and into the Caribbean. Today, it's 650 daily flights. By the time we hit the peak summer, we're going to be cresting 700 to 77 destinations. We serve 23 of the top 25 metros. We're definitely the places where people want to go.
Where we've had tremendous success over the last year or so is continuing to flesh out the international component of our network into Latin America with expansions out of Orlando as well as in Fort Lauderdale, our home. We found that there are other certain launching points in the United States where we have additional opportunity to serve our international guests. In fact, just yesterday, we announced two new destinations out of New Orleans into San Pedro Sula and Cancun. We think we've established an interesting franchise internationally. We know we have a very solid position in the large leisure destinations in the United States like Las Vegas and Orlando and Fort Lauderdale and New Orleans. We have a unique position in most of the top 25 metros that allow us to serve origination traffic into those places where people want to go.
I mentioned earlier that there's still a significant growth opportunity. The fun little green dot slide on the left is a representation of the math that the company does around digesting that opportunity. We take all the publicly available data that circulates around airlines and then distill it down into a model that helps us understand whether or not a certain route will meet our expectations for profitability. The threshold for that is mid-teens operating margins. Basically, the yield horizon, which is the black line, is that number. Anything that falls above that is an opportunity, and everything that falls below is clearly removed. What it tells us, as I said earlier, is despite our growth, there's still a significant number of untapped opportunities within the geography that we fly.
Now, what's interesting about the way we've explored and tackled that opportunity is off to the right, and you've heard us comment on this of late, is that our growth can come in waves in the way that we tackle it. We tend to do both new city flying as well as what we call connecting the dots. We serve both ends of the route, but we don't connect them yet. We have the ability to add frequency. In 2018, you can see the mix of those various things clearly favored additional frequency in connecting the dots. When we moved into 2019, we added a lot of new city flying, which, again, is part of our longer-term plan and will come in waves, but tends to be a little bit more challenged early on. It's longer to spool to maturity.
I think that was represented somewhat in our unit revenue performance last year. As we indicated, this year is going to look a lot more like 2018, which is going to be supportive to overall unit revenue trends and making things a little bit easier for us to digest. This is a network business. While we are a low-cost operator, it is still very important that we focus on maintaining positions of strength within our network. Visually here, it helps show you what I was illustrating earlier, which is the company has invested over the last few years in making sure we have a network that has points of presence and strength throughout the U.S., which gives us resiliency. It gives us access to traffic. You can see that the yellow dots represent where we have 25 or more daily departures.
We're now represented in a number of the largest major metropolitan areas, which helps us feed into the big leisure destinations like Vegas and Orlando. Again, a nice little diverse look at how we're deploying across the US. On the earlier slide, I mentioned that non-ticket performance has been a shining star for us of late. In the middle part of the last decade, our non-ticket performance began to dip. We had previously peaked out at about $55 per passenger segment, which, by the way, is still the worldwide leader in non-ticket performance. It had dipped a dollar or two heading into the middle part of that decade.
We sort of redoubled our efforts and said, "What do we need to do to drive further attachment into the non-ticket area?" What we've done is deployed a lot of technology into the way we revenue manage the individual products like seat assignment and bag fees and our own bundled product. That improved data and analytics is helping us merchandise those products to our guests in ways, which is driving more and more conversion and attachment, which is helping us drive this number up. You can see that we've had steady progress since 2016. Now we're expecting this year a further 3% improvement in non-ticket revenue. When we're thinking about the company's revenue positioning for 2020, the previous slide outlined that we should have a net tailwind on market maturity as a benefit.
Here, what we're seeing is an additional benefit in non-ticket performance of about 3%. We're really excited about this aspect of our business. It's something we have more control over. What we know based on the surveys that we do and the conversions in the product is that our guests prefer to buy their airline travel this way. They want the ability to pick and choose the things that are important to them. It's incumbent upon us to be sophisticated merchandisers and sellers of those products. We think we have tremendous headroom to continue to drive this number up. Costs. This is a low-cost business. In this competitive marketplace, it's incumbent upon us to continue to stay focused on our cost structure and to widen the relative advantage that we have against our peers.
We'd like to point out here that since 2012, you can see what's happened to our competitive advantage against all of these airlines, which has gone in the right direction and expanded. While I hear it all the time that in markets where we fly, "Well, so-and-so airline is also offering a fare that looks like yours," that's only because they're matching our prices. That's not a fare that they want to offer. It's something that they're doing to compete. Low costs matter because that means we're able to offer those fares at profitability. Over the long term, as we continue to grow, this is the core of the business. This is what creates our defensive and offensive position, both for growth and resiliency. I can tell you that there's no single person in this management team more focused on that than me.
We continue to drive the business forward using that as our North Star. We talk a lot about ex-fuel costs and the advantages that we have as it relates to that. For some reason, the fuel number tends to kind of get thrown off. I do not think that is appropriate. It still represents 30% of our total cost structure. One thing that is unique to Spirit, we believe, over the coming years, because of the fleet changes that we expect, is that our relative fuel burn advantage is going to expand considerably over that period of time. Today, as I said earlier, we operate 150 aircraft. Of that, about 20 some odd are of the Neo variety, which that aircraft burns about 15% less fuel than a comparable CO.
Every airplane that we deliver between now and into the future will be a Neo aircraft. Our relative fuel burn will continue to drop. That is somewhat unique for someone like us because we're the only airline that is small enough and growing fast enough to take advantage of that mixed benefit of fuel burn. This is true cost advantage that we will incur over time and we will benefit from over time. This year, we're expecting about 2% improvement in ASM per gallon. I would expect that to continue into the near future as we take more and more Neos. This is a contributing factor to why we're so bullish about continuing to widen our cost advantage against our peers. Fuel price neutral, this almost translates as ex-fuel benefit.
Good product, high reliability, good value proposition to our guests, a seamless travel experience, improved onboard quality, low costs, enhanced ancillary performance, all of that delivers very good margin performance for us. You can see that we've been stabilizing in the pre-tax line at around 12 over the last few years, which delivers mid-teens-ish operating margins. That's been our goal all along. When you look back in time, the company always viewed us as a grower in the mid-teens delivering mid-teens operating performance. I'm proud to say that that's what we've been able to do. Everything that we look at today says that's where we're going. When we talked about 2020, we said it was our view that with that as your input parameter, we believe that we can deliver earnings growth in line with our capacity growth.
That's the genesis of our view and investment thesis in Spirit. I kind of summarized the primary inputs. I can tell you that despite the near-term fluctuations in the market, we remain very excited about what we're seeing from a growth perspective. I think we have enhanced flexibility with regard to fleet and nimbleness around the way we deploy that, that will allow us to digest growth in ways that is accretive and in any environment, both positive and negative. The more that this current situation matures, we'll clearly learn more and let you know. We're keenly focused on keeping our costs in check and driving ancillary performance this year. With that, I think we reserve maybe a little bit of time for questions. Savvi, how much time do I have? Maybe five minutes?
By the way, we also have a breakout session. Yeah. Are there any questions?
Maybe I can ask a little bit more clarity on the near-term aspect of it. You're seeing some kind of pricing softness somewhere. Is there any specific markets that you're seeing it? How severe is it? It seems very early days of the market bias in price due to uncertainty. Is there any color around the relation to that?
Yeah. For the benefit of the webcast, Savvi was asking about near-term pricing weakness, the kind of geography, I guess, for lack of a better word. I think it is fair to say, Savvi, that it is near or it's early, so it's hard to say for sure that there's any pattern. I wouldn't say that what we're seeing is isolated to any particular area.
What we can comment on publicly is what we see in the fare environment. I think that what we're seeing is that inventories are open a little bit longer into the booking curve, closer to departure, which would tell you that there's more and more fares being sold at the lower level the closer you get in. I can't say with veracity the reason for that other than to say that perhaps the top of the funnel is being cut off a little bit and we're having to sell more and more leisure fares. The good news is there is traffic being sold at that level. We're very familiar with competing at a low fare level, so something that we're all too familiar with. Yeah.
I was just going to say, are you seeing any competitors who are canceling routes, moving supply in some of your markets?
We have seen a few of the larger airlines who have had cancellations in the Trans Pacific reallocate aircraft back into the domestic space. I do not have the routes at the top of mind, but I know there have been a handful. As it relates to overlap in Spirit markets, I would say that on an ASM basis for the first quarter, it is pretty nominal. I think for the full quarter, it is about 3% of our ASMs that were exposed to the additional capacity, as I recall, that was deployed. There could be some impact in those individual markets, but as a whole, it is not a big component of our network yet. Joe. Okay.
Could you talk about your latest thoughts on what impact you might see when the 737 MAX comes back into the market? Because I would have thought you'd have seen a greater benefit last year when it went away.
Yeah. That was the speculation. We didn't see a benefit with the suspension of the MAX flying. It's hard for me to say for sure, Joe, what would happen when the MAX comes back as at least one data point, given the fact that its removal didn't have tremendous uplift, at least as it related specifically to us. On a one-for-one basis, coming back in shouldn't have a tremendous downward pressure would be my gut reaction. Beyond that, however, there's pent-up supply of that airplane that has since it was originally removed.
There is another—I do not know what the number is, but a couple hundred airplanes domestically that may or may not be delivered over the coming months. I think that just depends on the phasing of that and where those airplanes are physically delivered to be used. Clearly, you get a different answer if that is Florida versus Hawaii and the West Coast. It sort of depends. I do not know.
Ted, a big part of this year's margin kind of opportunity is on the ancillary side, as you have kind of alluded to. Could you provide an update on what is driving this year, just how much of that is "in the bag" versus kind of what is still yet to kind of be achieved? You also said it is a multi-year thing. Maybe what else is in the pipeline? Yeah.
The reason that we're so bullish on this is the lessons learned over the last three or four years are sort of building upon themselves. The technology around the technology and the expertise around revenue management of ancillary products is not a one-time event, right? We really started using it in an exploratory sense on seat assignment as the first project and started to see tremendous value in the way we were able to drive conversion and drive yield. That is now rolling itself through our bags product and through our packages or our bundled services product. You are going to get year-over-year lapping benefit associated with seat assignment and some of the bags and packages project. I would say that we feel very good about the progress around that.
The opportunities going forward that we still haven't capitalized on revolve around kind of the package vacation product, which we've now signed up a new vendor, a new partner that's going to improve the access to inventory and the merchandising of that product. Eventually, a revamped loyalty program, which will drive better credit card economics and better attachment to us and spend on the credit card. Those are coming this year. I don't know that you'll get a tremendous amount of that benefit in this year, which again gives us a lot of optimism about the forward years as well.
Maybe just a quick follow-up to that. If you do see some pricing softness in the market, in the past, you saw the ancillary take rate come down with the pricing, but maybe it wasn't the same reason.
There is some concern that there might be a relationship there. Any thoughts on the ability?
Yeah. There has been in the past some relationship between ticket yield and ancillary performance. That had to do a lot in the past. There was a competitive aspect associated with that. There was an introduction of a new product and a lot of fare competition associated with that. I'm not so sure that I could say today that it will be exactly the same in this kind of isolated environment today. I still think we feel very good about our ability to drive ancillary in the neighborhood of 3% despite what we're seeing right now.
All right. As Ted mentioned, we do have another breakout session downstairs. As soon as I get the breakout, it is at quarter over two. Thanks, everybody.