Spirit and Frontier Airlines Propose Merger to Dominate Discount Travel

As airlines continue to struggle through the uncertainties and challenges of the pandemic, Spirit Airlines and Frontier Airlines, two of the biggest low cost carriers, have agreed to a merger that would allow them to set the terms of discount air travel across the U.S., Latin America and the Caribbean. The proposal is valued at $6.6. billion and is dependent on passing U.S. antitrust muster. It's no done deal, as the Biden administration has been taking a harder line on mergers than its recent predecessors. Low cost airlines like Spirit, Frontier, Southwest and Allegiant have generally arrived at this point in the pandemic in a stronger position than their legacy rivals such as Delta, United and American Airlines. And as travel appears to move into a new and less onerous phase of the Covid-19 era, Spirit and Frontier want to consolidate the gains they've made as new challenges align to confront them. Aside from solidifying their position against direct competitors like Allegiant and upstarts like Breeze Airways, Spirit and Frontier have also been looking for ways to compete for regional routes. Domestic travel is already back to 97% of pre-pandemic levels, and low-cost carriers have gotten a head start on recovery. Spending shifts On the ad spending front, both Spirit and Frontier have dramatically reduced expenditures in light of the general decline in air travel the last two years. From 2018 to 2019, the two each shifted media expenditures, as Spirit cut ad dollars by 25% to $610,000, according to Kantar figures. That same period, Frontier's ad spending jumped eightfold from $380,000 to $3.6 million. By the end of 2020, Frontier's expenditures dropped 94% to $207,000 as Spirit's plunged 99% to a mere $4,672. From January-to-Sept. 2021, Spirit put $109,000 into its ads as Frontier became more cautious, devoting just $30,000 to advertising, Kantar data shows. (It's important to note that Kantar doesn't factor in spending on social media or search.) During Q4, Spirit was one of the few airlines that saw some growth in the number of flights and filled seats, while Frontier was able to keep its declines comparatively in check, according to data from airline industry analyst Cirium. Not a mean feat considering the sudden devastation of the Omicron Covid-19 variant that struck much of the U.S. at the end of December. From cost to customer experience By merging, Miramar, Florida-based Spirit and Denver-based Frontier would be able to ensure their prices and services remain competitive against their rivals. The union would also allow the two to compete on the second main differentiator in flying after bargain prices: customer experience. The planned combination promises to offer more than 1,000 daily flights to over 145 destinations in 19 countries, across complementary network. At the moment, western-focused Frontier doesn't have much route overlap with eastern-oriented Spirit, according to Cirium. The analyst group estimates only 18% of the two airlines' current routes compete directly. “We are thrilled to join forces with Frontier to further democratize air travel,” said Ted Christie, president and CEO of Spirit, in a statement. “This transaction is centered on creating an aggressive ultra-low fare competitor to serve our guests even better, expand career opportunities for our team members and increase competitive pressure, resulting in more consumer-friendly fares for the flying public. We look forward to uniting our talented teams to shake up the airline industry while also continuing our commitment to excellent guest service.” Low-Cost Carriers Fly Above Covid-19 Turbulence