Low Fares Everywhere: The Numbers on the Frontier-Spirit Merger
Joe Cortez February 08, 2022
The airlines attempted to answer some of them in a presentation to investors, noting the cost savings and stability achieved through bringing both airlines together.
Merger Advantages: $1 Billion in Savings, Over 145 Destinations and 1,000 Daily Flights
With similar business models and compatible fleets, both airlines say their merger will save over $1 billion dollars every year. The cost reductions will come from saving over 285 million gallons of fuel, scale efficiencies and procurement savings, as well as other run-rate operating synergies.
When the deal closes, the combined company will offer over 1,000 flights daily to over 145 destinations. Spirit would get more exposure to the Midwest and West Coast, while Frontier would gain routes to Central and South America. The two also say their model would support flights to underserved airports in the U.S., including Eugene, Oregon; Ithaca, New York; and Worcester, Massachusetts.
Slide image courtesy: Frontier Airlines and Spirit Airlines
But will the ultra-low-cost fares remain? From a historical standpoint, consolidation often means higher airfares for all passengers. Frontier and Spirit say that won’t be the case. Citing public financial filings, the carriers say the four major U.S. carriers will still be an average of 80% more expensive compared to their fares, allowing the ultra-low-cost airlines to offer more seat miles with a total revenue per passenger of $108.
Slide image courtesy: Frontier Airlines and Spirit Airlines
For consumers, the airlines claim combining will offer better operational reliability and a stronger rewards program. On routes between their main airports, the carrier will offer more flights, allowing for redundancies during irregular operations. And while both companies have done extensive work on their frequent flyer programs – seeing Frontier offer a status match option while Spirit overhauled their program to add more loyalty tiers – the airlines say the new combined program will offer more flights and destinations, giving them more options to use miles.
Slide image courtesy: Frontier Airlines and Spirit Airlines
Merger Could Face Uphill Battle from Government and Unions
The plan for Frontier and Spirit is to close the transaction in the second half of 2022, which would kick off an integration phase which could last years. Before that happens, multiple stakeholders will have their say on the operation. Two of the biggest aviation unions – the Association of Flight Attendants-CWA and the Air Line Pilots Association – have yet to put their blessing on the corporate marriage.
“The Air Line Pilots Association, Int’l (ALPA) is committed to assisting our Spirit Airlines and Frontier Airlines pilot groups in evaluating today’s announced merger proposal in the context of our union’s long-standing goal of creating and maintaining good careers for our pilots and building successful and competitive companies for the U.S. airline industry,” a statement from ALPA reads. ““In the case of Spirit and Frontier Airlines, and as in any merger between airlines with ALPA-represented pilots, our union is committed to fully supporting both pilot groups in their quest for a joint collective bargaining agreement that recognizes their essential contributions to the merged airline while ensuring the long-term viability and success of the enterprise and enhancing career security and progression for our members.”
The AFA-CWA issued a similar statement:
"Our first priority is to determine whether this merger will improve conditions for Frontier & Spirit Flight Attendants just like the benefits the companies have described for shareholders & consumers. Our support of the merger will depend on this."
Stmt: https://t.co/3uBSUteYzq— AFA-CWA (@afa_cwa) February 7, 2022
In addition, the current White House has not been kind to airline alliances and mergers moving forward. In 2021, well after American Airlines and JetBlue begun implementing their Northeast Alliance, the U.S. Department of Justice sued the two carriers to break up the partnership. Because the Frontier-Spirit deal requires approval from both the Justice Department and Transportation Department, it could mean a long review period before the deal can close.
For flyers, questions around the pricing, product and frequent flyer programs. The carriers have not said anything about how they will integrate the two single-class products together (including whether or not Frontier will keep Spirit’s “Big Front Seat”), if the frequent flyer program will offer rewards based on distance flown or airfare price, or if the price of ultra-low-cost fares and ancillary fees could see a modest raise from the merger.
Feature image courtesy: Frontier Airlines and Spirit Airlines)
This is why DELTA acts so "woke" and liberal. They will cash in their woke loyalty to the regime and be repaid with aggressive antitrust action against NK/F9. It's all about $$ market share pricing power etc etc. "Hey we went all nuts on masks and sexual identity politics like you wanted Mr President, now don't let these guys compete with us"
You guys remember when SW bought airtran, same propaganda slide decks that somehow this was going to lead to more flights and lower prices for Atlanta flyers etc etc, instead they semi-abandoned ATL as a hub, and flight prices went soaring.
In all likelihood the merger will result in higher prices and reduced flights to jack up the prices of existing flights. If not, why would they merge? Why do regulators even allow these mergers to happen, let them compete! They're both profitable.
Nothing good will come from this for consumers.
Exactly. This merger is not necessary except to eliminate competition between the two. Both of these airlines were very profitable before the pandemic and will be again soon so they can't even rely on the Northwest->Delta, Continental->United, US Airways->American merger reasoning.