Talk at Routes Americas 2022 has inevitably centered around the planned merger of Frontier Airlines and Spirit Airlines to create the fifth largest carrier in the US, leapfrogging Alaska Airlines and JetBlue Airways.
While the timing of last week’s announcement came as a surprise to some, speculation about a tie-up between the ultra-LCCs has been on and off for years, stretching back more than a decade to Indigo Partners’ involvement in Spirit.
Since divesting its remaining stake in Spirit in 2013, Indigo subsequently purchased Frontier and later brought in former long-standing Spirit executive Barry Biffle as the Denver-based operator’s CEO. As Indigo chairman Bill Franke said to analysts, no one knows the two airlines better than Indigo does.
As well as sharing similar operating strategies and fleet types, a merger between Frontier and Spirit makes a lot of sense from a network perspective. The parties have no substantial overlap—barring cities like Fort Lauderdale, Las Vegas and Orlando—with Frontier having heavy exposure in the western US, and Spirit largely centered around the east.
Analysis of OAG schedules data for the upcoming summer season reveals that the ULCCs plan to offer almost 650 nonstop routes across their combined networks—and the two will compete directly on fewer than 20% of them. The main rivalry comes on sectors such as Orlando-Philadelphia, Denver-Las Vegas and Fort Lauderdale-Atlanta.
However, on the routes where the two overlap, they will face competition from one or more carriers on 97% of them. Only three airport pairs—Orlando to Punta Cana, San Salvador and St. Thomas—are without competition from another party.
Unlike previous legacy mergers, it therefore seems unlikely that a Frontier-Spirit deal will dampen competition or be detrimental to consumers. In fact, the combined strength of the two ULCCs could have quite the opposite effect, allowing it to compete even more aggressively against the four major airlines in US leisure markets. US regulators would do well not to push back too much on this merger.
While it may not herald a wave of wider consolidation in the US, it does mark the continued evolution of the ULCC market across the Americas.
Alongside the entrance of US startups Breeze Airways and Avelo in recent months, the likes of Lynx Air in Canada and Ultra Air in Colombia will take to the skies later this year. Innovative partnerships are also on the horizon between Chile’s JetSMART and American Airlines, and Mexico’s Viva Aerobus and Allegiant Air.
Speaking from the sidelines of Routes Americas, Viva Aerobus CEO Juan Carlos Zuazua said if the Allegiant joint venture gets the green light, it will represent a win for both carriers, opening up 200 nonstop markets between the US and Mexico. He also hinted that Viva Aerobus’ recent interline partnership with Viva Air in Colombia could be a first step to wider collaboration between the carriers.
Throughout the pandemic, ULCCs across the Americas have shown themselves to be nimble and alive to new opportunities. And travelers have shown they are eager for that to continue.
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