The coach passenger is king — perhaps for the first time ever — as airlines scramble for a larger share of the booming leisure travel market.
What’s happening: As the pandemic wanes, major carriers that traditionally make most of their money off premium business travel have shifted their attention to wooing vacationers.
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Meanwhile, discount carriers famous for selling cheap seats to popular destinations are beefing up to defend their turf.
The winners: consumers itching to visit family and friends, or explore the country, after being stuck at home for two years.
Driving the news: Spirit Airlines and Frontier Group are merging in a $2.9 billion deal that will create the fifth-largest U.S. airline.
The two carriers are known for their rock-bottom prices and no-frills service — not to mention consumer complaints about add-ons for everything from reserved seats to carry-on baggage and snacks.
They said in a statement that the deal would save $1 billion a year for consumers through lower prices and create “America’s most competitive ultra-low fare airline.”
The combination of the country’s two largest budget carriers will help them compete against American, Delta, United and Southwest, which together control about 80% of the U.S. air travel market.
Rather than layoffs, the companies said they expect to hire another 10,000 workers by 2026, on top of their existing 15,000 employees combined.
The merger could have far-reaching consequences by promoting lower fares for leisure travel, industry experts say.
“You’ll see a shift in how they compete for those clients and that could be a good thing for leisure travelers,” says Anthony Jackson, leader of Deloitte’s U.S. airlines practice.
“It’s rare to see this kind of consolidation be a positive for consumers,” said David Slotnick, who covers the airline business for The Points Guy.
Where it stands: Airline fares adjusted for inflation remain 18% below 2019 levels, while overall U.S. inflation is up 6% from 2019-2021, per Airlines for America data.
Jet fuel prices have risen sharply during that period, but so far, airlines are not passing on the extra cost to passengers.
The big picture: Leisure travel has recovered more quickly from the pandemic slump, which is why the ultra-low-cost carriers — Allegiant, Frontier and Spirit — have grown the fastest, while big carriers like Delta and United are still lagging.
Spirit’s first-quarter travel capacity — measured in available seat miles — is up 21.8% over the same period in 2019. Frontier is up 26.6%, while Allegiant is up 28.9%, according to Cirium data published by Airlines for America.
Delta, meanwhile, is down 16% and United is down 17.3% compared to pre-pandemic capacity.
Between the lines: Big carriers have sought to capitalize on the leisure rebound by adding more direct flights to popular vacation destinations like Florida, the Caribbean and Western ski resorts.
Yes, but: With stronger competition from a combined Frontier-Spirit, “this is a lever they won’t be able to pull as easily next time,” says Slotnick.
Meanwhile, two new low-cost airlines catering to leisure travelers, Breeze and Avelo, have also popped up during the pandemic.
What to watch: The Frontier-Spirit deal could face pushback from the U.S. Justice Department, which sued to prevent a domestic alliance between American and JetBlue — arguing that the agreement would drive up prices and reduce competition.
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