Harsh economic winds are blowing for four of the U.S.’s established budget carriers, while two newer ones are ramping up their networks and their competition with each other.
A federal judge’s ruling against JetBlue’s plan to take over Spirit as anti-competitive may have had the opposite effect it intended, with both airlines trimming expansion plans and shrinking their networks in some markets. At the same time, Frontier, which had been an earlier meger partner for Spirit is also feeling the effects, and even the largest budget carrier, Southwest, is having trouble returning to profitability.
Southwest and Spirit have both announced major changes in their business plans, with Southwest abandoning its open seating and adding some red-eye flights and Spirit abandoning its ‘Bare Fare’ plan for a 4-tier fare structure. Despite that, investors are pushing hard on Southwest for more change.
JetBlue’s stock took a sharp tumble last week, dropping 20% in one day, while rating agencies have downgraded their credit. Most of its new-plane orders have now been deferred by several years, and JetBlue is focusing more on leisure travel in the east while cutting some West Coast and trans-Atlantic activity.
Frontier, which has also been losing money, is also delaying deliveries and is cutting back flights midweek to focus on busier weekend business. And, it’s made a move that could win back some who are turned off by its fees: It’s added a co-branded credit card with Barclay’s that allows holders two free bags per ticket.
At the other end of the spectrum, two smaller budget airlines, both focused on non-stop service to smaller cities and leisure travel, have turned their first profits in the past few months. However, Breeze and Avelo, both started in 2021, are now beginning to compete with each other more, including Breeze’s recent addition of flights at Avelo’s previously-exclusive airports in New Haven and in Wilmington, North Carolina. No telling yet how that will work out.
