[Scott Olson / Staff via Getty Images]
Flight costs $80… but the overweight luggage costs $180, and we hope you packed a sandwich. Budget airlines like Spirit and Frontier are (in)famous for low prices, zero frills, and pricey add-ons. They rebounded from the pandemic quicker than legacy airlines because their primary customers — thrifty vacationers — returned to airports before business travelers. Now America’s two budget behemoths are tying the knot: Frontier and Spirit agreed to a $6.6B merger, creating what would be the fifth-largest US airline: #FrontSpirit (real name TBD). Yesterday Frontier’s stock rose 3% and Spirit’s soared 17%.
Battling the Big Four… by adding one more. The Frontier-Spirit deal is the latest in a long line of airline mergers: American, Delta, United, and Southwest were formed from 10 airlines and make up 80% of US air traffic. #FrontSpirit would command only 10% market share, but it could face a tough path forward:
Takeoff can be tricky when regulators want you grounded… Frontier and Spirit insist that their merger will benefit customers by providing low-cost flights in more cities. But while the deal may have taken off without trouble during past presidencies, analysts say Biden’s “big is bad” approach could complicate the deal. Plus, Frontier and Spirit have the industry's worst customer-satisfaction ratings, and the new airline could face competition for cost-conscious flyers from the likes of American, which is expanding its budget flights.