Initially reported by the Wall Street Journal, Spirit Airlines and Frontier Airlines may be in renewed talks on merging the two ultra low cost carriers into one. This is in wake of a failed merger attempt with JetBlue Airways earlier this year and potential rumblings of Spirit Airlines entering Chapter 11 bankruptcy protection and restructuring. At the time of writing, the details on the potential merger remain unknown.
A Tough Ultra Low Cost Carrier Landscape
In North America the Ultra Low Cost Carrier (ULCC) landscape is quite a precarious one. Airlines are having to get cleaver in order to differentiate themselves from a full service airlines. In past months Frontier has made some welcome changes such as blocking middle seats, waiving change fees and even giving seniors over the age of 55 discounts on base fares. Spirit is doing similar changes like blocking out middle seats towards the front of the aircraft and offering complimentary snacks in their Big Front Seat product. Many of these changes are being implemented to remain competitive with Southwest, JetBlue and legacy airlines to name a few. Despite these changes, the ULCC market is seeing a decline in revenue. Spirit Airlines saw a net loss of nearly $450 million for 2023 alone. Up north in Canada, Lynx Air and Canada Jetlines ceased operations following their financial struggles. While Spirit or Frontier may not have the same outcome, one has to wonder if Spirit looking to rekindle merger talks with Frontier is indictive of their poor financial results. Theoretically if the merger did go through, it would be hard to tell if the combined airlines and aircraft would poke a dent in the saturated airline market or what pros and cons would look like for the consumer. We will have to wait and see.
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