Spirit Airlines and Frontier Airlines are merging to create a larger ultra-low-cost air carrier, but is it really a cheaper deal? Two of the worst-ranked airlines are merging to form a new discount air carrier that will likely upsell you on everything you can think of.
Spirit Airlines and Frontier Airlines which last month ranked second and third respectively behind JetBlue as the worst airlines in a Wall Street Journal survey.
The deal calls for Frontier Airlines to buy a 51.5% interest in the new entity for $2.9 billion of cash and stock, as well as assumption of debt and leases. Spirit equity holders would own 48.5% of the new combined airline. The merger is expected to close in the second half, subject to completion of regulatory review and approval of Spirit’s stockholders. Frontier’s controlling stockholder has already approved the merger, according to a statement from the two airlines.
If the merger secures regulatory approval this summer, could heighten competition among low-cost airlines. Frontier and Allegiant have well more than 100 overlapping routes, and Allegiant and Spirit fly the same routes minimally.
Allegiant, though, is very much a hybrid airline and leisure travel package provider, bundling flights, hotels and car rentals so doesn’t compete with Frontier and Spirit in a significant way when it comes to trip packages.
Allegiant is traditionally among the highest profiting U.S. airlines, although in the fourth quarter its net income fell 28 percent year over year to $10.7 billion. Executives cited the cost of compensating passengers for cancelled flights because of crew shortages and Covid disruptions as dragging down earnings.
Allegiant currently flies more than 600 routes to more than 130 U.S. cities, but could be expanding substantially in Mexico. Allegiant has a proposed deal, which is pending regulatory approval, with Viva Aerobus to merge their Mexico-U.S. networks.
The transaction will create an even larger ultra-low-cost airline that will try to compete against the world’s largest low-cost air carrier, Southwest Airlines. Southwest ranked as the third-best overall airline behind Delta Air Lines and Alaska Air Group.
But will the merger actually make the cost to fly the new no-frills Frontier/Spirit air carrier cheaper in the long run?
“Together, Frontier and Spirit expect to change the industry for the benefit of consumers, bringing more ultra-low fares to more travelers in more destinations across the United States, Latin America and the Caribbean, including major cities as well as underserved communities” the airlines claimed in the statement.
The airlines offer some of the lowest prices on airline tickets — but they then charge passengers for other services such as seat selection (if they don’t want to sit in a middle seat) or for carry-on and checked baggage. A small personal item can be brought on the plane. Spirit has even charged passengers for checking in at the airport.
Both airlines don’t offer complimentary snacks or drinks, but they will gladly charge you for them. And leg room is often about 5 or 6 inches tighter than standard airline flights, according to a Nerdwallet report.
JetBlue offers free wi-fi on all its flights and Southwest both offer low-cost air tickets and many free services. Southwest doesn’t charge for a personal item or carry-on bag and the first two checked bags are free. It doesn’t charge a flight-change or cancellation fee and soft drinks are free, according to travel charges listed on its website.
