US budget airlines are struggling. Will pursuing premium passengers solve their problems?
Delta and United Airlines have become the most profitable U.S. airlines by targeting premium customers while also winning a significant share of budget travelers
DALLAS (AP) — Delta and United have become the most profitable U.S. airlines by targeting premium customers while also winning back a significant share of travelers on a tight budget.
That is squeezing smaller low-fare carriers like Spirit Airlines, which filed for bankruptcy protection on Monday. Some travel-industry experts think Spirit’s troubles indicate that travelers on a budget will be left with fewer choices and higher prices.
Other discount airlines are on much better financial footing than Spirit, but they too are lagging far behind the full-service airlines when it comes to recovering from the COVID-19 pandemic. Most industry experts think Frontier Airlines and other so-called ultra-low-cost carriers will fill the vacuum if Spirit shrinks, and that there is still plenty of competition to prevent prices from spiking.
Spirit Airlines has lost more than $2.2 billion since the start of 2020. Frontier has not reported a full-year profit since 2019, although that slump might end this year. And Allegiant Air’s parent company is still profitable, but less so than before the pandemic.
