Spirit and Frontier: Together At Last

Frontier, Mergers/Finance, Spirit

The news broke early yesterday, and people couldn’t stop talking about it… Maury Gallagher is retiring as CEO of Allegiant! Oh wait, not that bit of news, though a hearty congratulations to Maury. Of course, the biggest news of the day was that Frontier and Spirit will merge. Finally. This has been rumored and suggested for so long that it’s almost anti-climactic.

Spirit and Frontier will come together to form the 5th largest airline in the US and become a clear leader among ultra low cost carriers (ULCC). This may sound like an enormous airline, but put it in context. According to Cirium data, in March 2022, Ryanair will still be almost twice as large in terms of seats.

Original photos via Spirit and Frontier

The two airlines’ paths have crossed time and time again over the years. Spirit was the original ULCC in the US, but Frontier got there eventually. And when Indigo Partners saw what Frontier was doing and how cheap it could buy the airline from wayward owner Republic, Indigo dumped its holdings in Spirit and bought up Frontier instead. Frontier’s CEO, Barry Biffle, learned his ULCC chops at Spirit.

Now, the two airlines will come together in a surprising way. Frontier shareholders will own 51.5 percent of the new company while Spirit shareholders will own only 48.5 percent. This control doesn’t come cheap as Frontier will pay Spirit shareholders 1.9126 shares in the new company plus $2.13 for each Spirit share they own today. Spirit, after all, is the larger airline. Its full year 2021 revenues were $3.175 billion while Frontier’s were $2.060 billion. Spirit ended 2021 with 173 airplanes while Frontier had only 110. But why does Frontier care about having control? This is the Bill Franke show.

Bill Franke runs the Indigo Partners private equity group which has been behind all sorts of ULCCs around the world, most of them successes like Wizz Air and Volaris but some… not so much. (Look up Avianova in Russia.) Indigo has been wildly successful in the US, both when it bought and eventually sold its stake in Spirit and with its cheap acquisition and subsequent IPO at Frontier. The assumption was that Indigo would eventually bring these two airlines together, and that is what’s happening here.

The new airline will have Bill Franke as the Chairman of the Board, and he will lead the search for the management team, but that’s about all we know. The surviving name hasn’t been chosen, nor has the headquarters city or anyone on the management team. There is very likely a good reason for this.

Money.

There is plenty in the investor presentation about how this will be good for consumers and will create opportunities and all that, but let’s remember that when Frontier went public, it took the ULCC ticker symbol. Low costs are the key to everything for this airline, because that’s what enables low fares. There will clearly be an effort to get costs even lower than they already are through — and I hate the word — synergies.

Spirit’s unit cost stage-length adjusted ex-fuel and special items for 2021 was .41 cents higher than Frontier’s, and both are very low in comparison to others. These are higher than they should be, and they will come down once pandemic-related issues are further behind the airline, but the fact that Frontier is lower than Spirit shows just how serious that airline is about costs.

I have little doubt that Indigo will use every opportunity it can to bring down those costs. A headquarters competition between South Florida and Denver? Oh yeah, that’s a great way to squeeze out every penny from the locals. The name can be used as a bargaining chip if any one area cares about it, kind of like how Dallas/Fort Worth would have freaked out if US Airways survived. Presumably all else being equal, Indigo would go with Spirit as the name since that means there are fewer airplanes to paint. But I imagine everything is on the table if there is money to be made.

As for the management team, well, I’ll be curious to see where that goes. I have little doubt that some of the current people running the airlines will just want to leave. They’ve been through a lot, and a merger is not easy. But otherwise, Bill will pick and choose those who he thinks can best create the ultimate ULCC. What exactly that means isn’t yet clear since both airlines have come to different conclusions in some areas despite having the same goals.

Yes, both airlines have a similar basic model. They use Airbus narrowbodies to serve mostly big cities to appeal to the leisure traveler. They both have an unbundled model that has a low base fare along with the option to either buy a la carte or add bundles to get to the product each traveler wants. Spirit is based in Florida while Frontier is based in Denver, and the networks are largely complementary with the main overlap being in Florida itself, a good place to be in these days of heavy leisure demand.

In fact, looking at March, Spirit has nearly 62 percent of its departures touching Florida on one end while Frontier has more than 52 percent. If we look at the route map, these are the airports that have more than 3 percent of departures for each airline.

Frontier and Spirit Largest Airports March 2022

Data via Cirium, Map via Great Circle Mapper

Frontier and Spirit are large and will get larger in Florida and Las Vegas, the two biggest leisure destinations in the Continental US and also — not coincidentally — the largest places in Allegiant’s operation. Spirit brings its legacy presence in Detroit along with Houston and Atlanta to the mix while Frontier adds Denver, of course, and Philly. Chicago is big for both, though Frontier has been shifting its service to Midway.

This will help both airlines to increase coverage, but the differences go much deeper than this. There is a philosophical difference in how the airlines build their networks.

Frequencies by Route March 2022

Data via Cirium

Spirit has long had a focus on serving routes at least once a day. Sure, it has some that go less, but for Frontier, sub-daily is the airline’s bread and butter. Now, you bring them together, and do the philosophies change? Does one win out? Or does it truly just become a combination of both, serving cities big and small with varying frequencies as needed?

These are all questions that will be answered over time. We’ll also see whether the Big Front Seat (domestic First Class with no extra service) survives or if Stretch seating (extra legroom coach) will win out. I find myself assuming that we’ll see Stretch win if it pays for itself, which it probably does or Frontier would have given it up long ago. But we won’t have any idea of the actual direction until we learn the management team’s makeup.

In the meantime, it’s all about presenting sunshine and rainbows and convincing the feds to allow the merger to go through without a challenge. It’s hard to see how a challenge would be successful here. What would they want the airline to give up? Gates in Orlando? Then again, this DOJ is doing odd things with the whole challenge of the American-JetBlue Northeast Alliance, so who knows what will happen.

Overall, I like this merger, and I think it’s been a long time coming. That being said, I should reserve my full judgment until we get more details than the sparse information we learned yesterday.

65 comments on “Spirit and Frontier: Together At Last

  1. How compatible are their technology systems? It seems to be a major component in mergers. AA did a pretty decent job while UA was, um, sub-optimal…

    1. GringoLoco – I don’t know anything about maintenance systems, etc, but they are both on the Navitaire’s reservation system.

  2. The NYT article on this said the merger will “cut costs while adding jobs.” I’m not really sure what that means (other than being marketing fluff the reporter swallowed whole.) Is it this “synergies” thing? Do you have examples, beyond the one time thing of squeezing money out of cities to get the HQ (probably not good for the public)?

    1. I’m wondering about that also. Frontier uses 3ed party staffing for most of its airports operating while Spirit is a mixture of staffing. In DEN the Frontier name isn’t welcomed like it’s glory days because the Laid off so many employees and replaced them with 3ed party staffing.
      While the Animal tails are a nice touch you can’t miss the big yellow banana from miles away.
      If they do go for a complete New Rebranding. Use the name SkyBus or LIFT “The Spirit of the new Frontier”.

      1. After the last fiasco, I don’t think anyone would ever want to use the name “SkyBus”…it’d be like naming yourself “Atlitalia”.

        Oh, wait…

        1. Perhaps they will wait for Allegiant to be merged into the Frontier/Spirit company and then rename themselves Alle…talia?

    2. David – Well, it’s the basic idea of growing to reduce non-operational costs. So, they can add more airplanes, more employees, etc, but they will need fewer HQ staff as a % of the operation. It helps to cut down overhead. I assume that’s the plan.

  3. Question for LA based flyers? Since Spirit serves LAX but F9 left because of rising cost does the new airline stay at LAX or does it move out to ONT. Can they afford not to serve LAX?

    1. Greg – This is a question that won’t be answered until we know the management team. Spirit is a believer in LAX, but also, it was able to stay in Terminal 5 while Frontier was banished to the midfield concourse.
      Ultimately, the costs at LAX are high, so does the Frontier or Spirit strategy win out?

  4. And ironically yesterday morning Frontier had an IT outage that grounded flights for hours and led to the cancellations of about 20% of their schedule. Hopefully not an omen lol

    1. Along with the right talent to run point and the bandwidth to complete the task before the major milestone.

      1. Weird Al devoted a song to this, “Mission Statement” from the album “Mandatory Fun” in the style of Crosby, Stills & Nash. And man does it ever ring true.

        How long until Allegiant decides to merge with Spirit once they realize they are not able to compete with them?

        1. Oh man I never heard of it until now. Thank you so much for sharing! I had such a good laugh listening to it.

        2. Thanks for sharing the Weird Al tidbit. I’m a big Weird Al fan, but had never heard of “Mission Statement”. The animation is as brilliant as the song.

  5. This is a blog of av-geeks where all the above points matter. Where the flying public is concerned, none of these points matter, only the price of the airfare. If the combined airline can achieve a lower priced airfare, it will succeed.

    1. Probably. . .but not definitely. I have family members that will pay $50-$100 RT to avoid Spirit after being burned — these are middle class families. The carry-on baggage fee thing confuses the hell out of people also from personal experience flying Spirit. I think that can be overcome if the airline is really clear when buying a ticket. If the operation is not ran right its not a slam dunk.

  6. Am I the only one who doesn’t see all the labels in the “Frequencies by Route March 2022” chart? I only see that the orange is “Less than one daily”. I’m assuming yellow is “One daily” and green is “More than one daily”?

  7. What does this mean for JetBlue? The combined airline will dominate in some of the markets JetBlue serves, namely Florida. Also on the west coast Frontier is pretty well known, and let’s not forget the Midwest, where JetBlue is lacking. This combination will make JetBlue irrelevant in a lot of places, that they had planned on building up. Yes, JetBlue offers a superior product, but depending on how they rebrand, and if the rebranding resembles Southwest, then they will be a true force to be reckoned with. I just don’t see the path forward for JetBlue as a stand alone carrier anymore. The NEA isn’t enough to keep up with this type of competition. JetBlue just got a lot weaker of an airline, I feel.

      1. No. B6 should join oneworld (if that passes government/oneworld muster) and that would allow increased cooperation without the costs of a merger. I see it as AS/B6 providing the coastal “bread” with AA providing the national/intercontinental “filling”. A bit simplistic I admit but if a bored someone would create an AA/AS/B6 combined route map for North America the analogy is obvious.

  8. A couple of key notes that F9 and NK didn’t and won’t put in their press releases.
    In most legacy carrier hubs, the two combined have less than 5% combined share of departures. Even though their aircraft have much higher number of seats/departure, they are still a pretty small share of the US market except for in S. and Central Florida and LAS. As long as there is adequate space for competitors (and those airports have every reason to keep growing), there is little reason for DOJ concern. The real message is that F9 and NK didn’t see a path to growing to a relevant, competitive size on their own.
    The growing pilot shortage is another factor. You need only read airline pilot chat sites to know that ULCCs are losing pilots about as fast as they train them- perhaps as bad as regional carriers. A larger combined size will allow them to raise fares and wages and retain workers, including having to raise either contract ground employee wages or bring those jobs in-house.
    This merger is as big of a threat to WN as it is to anyone. WN’s costs are the highest of low cost carriers and closer to legacy costs but WN’s product is still single class and basic with add-ons such as free bags and no change fees as their biggest draw. With the delay in getting the MAX7 in service, WN is strategically challenged by the F9/NK merger.
    While ULCCs talk about fuel efficiency, they get there by stuffing seats onto the same airframes that other airlines operate and by not operating regional jets. From the graph in the merger presentation, WN is more fuel efficient than the legacy/global carriers, DL leads the legacies, both because of it having the best fuel efficiency of the big 3 because of a lot fewer regional jets but also a much more fuel efficient international fleet. The impact to the legacies will be where F9/NK have the greatest cost advantage

    1. This was my reaction to the article… Brett calculated and identified where each airport was more than 3% of the airline’s capacity. I’m much more interested in each (and the combined entity) is strong relative to others.
      Share of O&D by originating market? Share of seat capacity at hubs? Spirit seems to do a pretty good job of being the challenger at fortress hubs (like Atlanta, Detroit, Houston, Dallas, etc.).
      Never having flown either, Spirit seems the better managed…

      1. I see this as an acknowledgment that the p2p well may be deep but it’s not infinite. With the big 3 + WN getting in on the P2P leisure space the market is nearing saturation. There are only so many beaches, mountains and tourist traps to go around and when the economy inevitably turns that discretionary traffic goes *POOF”. Better for both of them to circle their wagons now than in the middle of a recession.

        It will be interesting to see what kind of network emerges. They both offer connections but F9 won’t push them unless the customer asks. Ex: of I want to go from AAA to DEN on the 23rd and there are no flights it says sorry no flights available. If I try and build an AAA to MCO to DEN it will build an itinerary and fare quote. IMHO they will have to open more connection opportunities to maximize the network and fleet. I could see it similar to WN in the 80s & 90s where they connected city pairs outside of the traditional hub/spoke model.

        Anyway…this will be fun to watch.

    2. Great strategic analysis! Yes, Southwest will be impacted by the continued, unfettered ULCC growth. What will they do? Surrender? Shut down? Pretend they are Burning Man and self-immolate?

      Doubtful.

      They will fight in the markets that make sense to protect. They will destroy yields in markets where they feel that strategy makes sense. But, most likely, they will continue to enhance their business travel products and keep nibbling away at the Big 3. They have the luxury of reaching down OR up the fare ladder to generate not just revenue, but profit.

      Delta does not have that luxury. They MUST generate premium revenues to cover their costs. They are doing very well, but the revenue space they are operating in is a niche of the total market. A niche that AA, UA, and, with increasing intensity, WN are all coveting. What will Delta do when their premium revenue begins to erode? They must protect it at ALL costs. Much less wiggle room for them than for Southwest.

      Southwest has proven itself to be THE most adaptable carrier. 09/11 was a black swan event for Southwest. Their short-haul network lay in tatters, so what did they do? They changed their business model into medium-haul. How did that work out for them? I believe they went from somewhere around 350 planes to 750 planes. I’m confident that the merged Spirit/Frontier will not force Southwest into bankruptcy, a place Delta knows well.

      1. Delta knows less about bankruptcy than AA or UA if the yardstick is how much time it or its predecessors have spent in BK since deregulation.

        While you continue to salivate about anyone and everyone coming after Delta, the simply fact is that Delta has the highest share and the lowest low cost carrier penetration its core hub markets than American or United. That isn’t my conclusion but one that most analysts recognize and which also explains why Delta gets more revenue per seat mile than American or United.

        Delta also does a better job of controlling costs than AA or UA including in fleet and fuel spending and that is apparent in part in Spirit/Frontier’s own merger presentation.

        The greatest F9/NK penetration is in AA and UA markets. Not my opinion but facts.

        As to the comment from Steven, legacy carrier hubs are in the largest markets and also where those legacy carriers have tried and sometimes pulled back markets and capacity. One truism of the airline industry is that once some airline starts a route and proves it has some minimum level of viability, someone else will come in and replace that flight if it is pulled or capacity is significantly reduced. That is exactly why PHL has flipped to become a major ULCC market over the past few years.

        Markets like ATL to Florida have virtually bottomless levels of demand which is why everyone is in them – and yet there are enormous average fare differences – which means that carriers choose the minimum fare they can support and go for that level of fare. Delta remains the largest airline in every Florida market but it also gets a fare premium. Having multiple carriers in heavily leisure markets does not mean that there aren’t significantly different financial outcomes for each carrier.
        Because F9 and NK are so heavily leisure focused, there are markets like ATL where they can be more efficient w/ their schedules, operate largely aircraft on fewer flights, and ultimately make it harder for the 2nd tier and following carriers.
        As much as you want to believe otherwise, WN, not DL, is the carrier that has lost the most share from ATL and in other legacy carrier hubs. WN and the ULCCs are butting heads not just in legacy carrier markets but also in countries across the US to major leisure destinations. AS and B6 have much better defined hubs which are less vulnerable to ULCCs than WN.

        1. “Delta remains the largest airline in every Florida market” Huh?? #5 at MCO, #3 at TPA, #4 at FLL, #2 at MIA – they’re not #1 in any of them. You keep focusing on the hubs’ O&D traffic, but we all know ATL’s primary focus (as well at CLT) is funneling people to and from Florida (2/3 of ATL’s traffic is connections) – and this is a major threat to that. They will keep adding nonstops from the north to Florida, and keep bypassing ATL and CLT as they double the size of their fleet over the next four years. More than half their flights touch Florida. This is definitely as much of a threat to DL and AA as it is WN, premium airlines or not.

          1. It’s Tim Dunn’s duty to turn every discussion into how great Delta is. No one can ever touch or hurt the great Delta. Don’t you know that?

            1. Lol, I’m well aware. He’s very knowledgeable, and often he musters fair arguments (Delta is a very good airline on a lot of measures), but just as often there’s a lot of obfuscation and hand-waving and avoidance of arguments that don’t support his position… “I’m going to ignore your points and instead write 7 paragraphs with 10 reasons Delta is great…”

              Tim, everybody would respect your arguments more if you’d be willing to concede Delta’s weaknesses and threats in addition to their strengths and opportunities (classic MBA SWOT analysis).

          2. Since the entire paragraph where you extracted that quote is about ATL, it is clear that my statement was about DL being the largest airline from ATL, not the nation as a whole. Context and accurately reading what was said matters. A LOT.

            and, as other posters have noted, there is not a limitless number of point to point routes that can be added from every non-hub airport to Florida or Las Vegas. WN has found that which is why they have gone to a hybrid hub and spoke network and why other posters, not me, noted that you can make connections on F9 and NK although that is not the primary intent.

            With 150+ seats on an aircraft and a level of service that many customers will not touch, there simply is not a bottomless pit of number of flights of opportunity for either NK or F9 of G4… that is why THAT segment of the industry is consolidating. They, not me, recognize that they do not have the mass to compete against legacy carriers including in their own hubs, as CF notes from the map/graph above.

            As for DL vs. AA and UA, you need only refer to the graph above as well as the investor presentation which CF also linked. When AA touts its newer fleet which costs its hundreds of millions of dollars more per year in interest expenses and they still end up w/ the lowest fuel efficiency of the big 3, it is pretty apparent that the whole notion of fleet age and operating expense that has been the narrative of choice of some for years was and is flawed. And given that UA is embarking on a massive refleeting that will increase its debt significantly, we are going to watch the same thing play out at UA.

            The data shows that DL IS the most competitive against low cost and ultra low cost carriers and that is absolutely relevant when some choose to pick winners and losers of the NK/F9 merger.

            1. Tim,

              With all due respect, you’re gloating again. Delta is a superb airline, but it’s not perfect, as you constantly allege. As for the overall fleet fuel efficiency numbers, Mark Twain once observed, “There are three kinds of lies – lies, damned lies, and statistics.” American’s relative fuel efficiency statistics are skewed by its ownership of three regional airlines that contain about 340 aircraft, with roughly 110 50-seat E-145s. Delta’s wholly-owned carrier, Endeavor Air, has 195 total aircraft, of which 50 or so are 50-seaters. Those wholly-owned regional airlines’ fuel efficiency numbers are included in each airline’s unit cost stats, which hinders a true apples-to-apples comparison among the various carriers. I’m not suggesting that American’s fuel efficiency numbers would be superior to Delta’s without the E-145s and the other regional aircraft it rosters. I have no way of knowing that, since I don’t have access to the airlines’ internal accounting data. While DOT unit cost data are useful in many ways, they aren’t the Holy Grail.

            2. Ghost,
              Fleetwide fuel efficiency is based on fuel usage for an airline’s entire network as it is flown and has nothing to do with whether regional carrier capacity or individual aircraft are owned or contracted.
              The reason why AA’s efficiency is at the bottom is because more than half of their widebody capacity is being flown by 777-200ERs which is the least fuel efficient widebody aircraft in the US.
              The greatest fuel efficiency gains happen on the international fleet and, even there, the A330-300 is 17% more fuel efficient per hour to operate than the 777-200/ER so you don’t necessarily have to operate new generation aircraft in order to see higher fuel efficiency.
              AA did a great job of buying larger narrowbody domestic aircraft but a smaller percentage of their narrowbody fleet in 5 years will be new generation than for either DL or UA (or WN or the ULCCs for that matter).
              There is even more fuel efficiency gains between the A330-900 and the 777-200ER as well as a similar comparison when it comes to the A350-900 vs. the 777-300ER (offset by the larger number of seats on UA’s 77Ws)
              United has the same 777-200/ER problem but a chunk of their 777-200/ERs are grounded.
              The other side is regional jets and it has to do with the sheer number of regional jets but also the fact that there isn’t a single regional jet that uses new technology engines – unlike the A220 and the MAX and NEO families.
              Add in that AA and UA have much higher percentages of their RJ fleet that are either 50 seaters and reduced capacity large RJs) and RJ fleets do pull down fuel efficiency

              And, again, F9 and NK used the fleet fuel efficiency comparison of themselves to each of the big 3 in their presentation but it matches exactly what I have said; they have no reason to show a bias for DL over AA or UA.

              and this whole discussion is about fuel efficiency and has nothing to do with actual fuel cost; Delta had a double digit cost advantage because of its refinery over every other US airline in the 4th quarter and over AA and UA (but not WN) in the 3rd quarter.
              It also doesn’t include fleet ownership costs which includes fleet-related interest payments on debt or aircraft lease payments. Like it or not but DL has lower fleet ownership costs per ASM than AA or UA and still has lower operating costs (fuel and maintenance).

          3. DL is #1 at SRQ, so there’s that!

            (Not a shot at SRQ, it was my home airport for a couple of years and I love it!)

            1. Craig…..You may want to double-check that. Delta has approximately 21% share in SRQ. Southwest has a 23% share, making them the largest carrier in SRQ by market share.

              Delta was number there for what, 30-40 years? Southwest trumped them in about 2 years. That’s what Southwest does: if they really want something, they take it. Hawaii is the latest example of this.

              Of course, our friend will say Delta is the biggest carrier by whatever statistic he wishes to use: highest average fare, highest revenue premium, least unionized flight attendant group, most rampers with X-boxes……etc.

            2. @MissTheMasters – strangely, Wikipedia shows DL carrying more passengers than WN for the period 10/20-9/21 (543k vs 505k), but shows WN has having the higher market share (23.58% vs 21.44%.)

              That’s what I get for using Wikipedia, but when you’re a lunch-hour poster like me sometimes you just have to go with it.

              The Wikipedia chart also breaks out Republic separately, and they operate the DL nonstops to LGA, so that could muddy the waters further.

              But your point that WN has taken a big share of the SRQ market is still well taken.

      2. If Southwest was really “the most adaptable carrier”, they would have gone into JFK when the opening was there and JetBlue might not exist.

        They’re good, but they tend to be too conservative sometimes.

        That said, they’ll survive the NK/F9 merger just fine.

        1. Craig….The biggest reason they didn’t go into JFK is because they had just built an 8-gate terminal at nearby ISP. They had not yet turned to the “big airport” strategy that they adapted later, as they continued to evolve.

          Another reason is that JFK had no available slots at the time. If you will recollect, the ONLY way JetBlue (née Nations Air) even got off the ground is because Senator Bill Bradley “found” them some slots, magically. JetBlue’s New York political connections have ALWAYS been tied to its original investors and are reflected by that to this very day, with Senator Schumer. It’s no coincidence that JetBlue always seems to get their way in New York, including Newark. With Senator Schumer riding herd and pulling strings, the Northeast Alliance might pass DOJ muster.

          As a nod to Schumer’s power, he last year publicly stated that he’d like to see Southwest in Syracuse. A week later, Southwest announced Syracuse.

          1. WN got pushed out of EWR by UA. It could have entered JFK if it wished and has not. DL and WN/LCCs serve different clientele as their main customer base.

  9. A few random thoughts:

    This isn’t a huge merger. The combined airline will only have 6% of the overall market. Logically, it should pass regulatory muster. Then again, one never knows what regulators will do.

    I wonder what took so long. The pandemic apparently had an effect, but this merger really is a no-brainer.

    I’m guessing this merger, in and of itself, will have virtually no impact on the overall marketplace in the short term. Both carriers are already in place. They’ll simply be one carrier going forward. I doubt there will be much impact on JetBlue, as the carriers cater to very different travelers. But I do wonder what the impact will be in South Florida, specifically Miami, where there’s been a massive build-up. I’m guessing things will sort themselves out over time.

    I’m wondering if Volaris and/or JetSmart will codeshare with the combined carrier, since Indigo owns (or will own) a share in all of them. I think Volaris already codeshares with Frontier. Will Volaris’ arrangement with Southwest continue? I’m guessing it will if it’s mutually beneficial. As an aside, Doug Parker will have more free time on his hands in a couple of months, maybe he’ll sit on the new carrier’s board, since he and Franke have a long-standing relationship. But seriously, it’s possible that all of Indigo’s western hemisphere carriers could codeshare with American. As it would be a simple way to tie their networks together. American’s detractors accuse it of becoming a ULCC, to which I counter (repeating myself as well) that an airline’s main function is to provide transportation, not food or entertainment.

    This merger was largely inevitable. I doubt it’ll have much real-world impact.

  10. Plane-painting aside, my bet is that the Frontier name will win out. Denver won’t want to lose their “hometown airline” and I get the feel that folks are willing to pay a bigger premium to not fly Spirit than to not fly Frontier, even though Spirit’s schedule is better so IRROPS is less of a pain.

    Given that IIRC F9 and NK aren’t super competitive in any markets where new entrants want in but can’t get gate/slot space, I can’t see any real divestment requirements on the horizon for approval of this merger.

    If anything, there’d be a merger condition that neither airline drop any cities currently in their network for 12+ months post-merger, maybe even “all cities currently served have to have at least X% of current avg departures/day”. Which forces the merged entity to do what they say they’re gonna do with the merger rather than just shuffling around and dropping competition. That *would* net new routes thanks to competitive overlap, and that’s good.

    Talking about my own market, F9 has gone from 2nd most destinations at AUS to <20k pax per month between 2018 and now, even as Allegiant has set up a base here. NK is in 6th place now, though they've been as high as 5th before (AS is now 5th). F9 + NK would still put them in 6th, but they'd be within striking distance of AS. F9 appears to only run two destinations right now (DEN, LAS) while Spirit does more. A merged NK + F9 would probably take DEN up from 5x/wk (my how the mighty have fallen) to daily, and probably keep the LAS frequencies at 2x daily…and that'd be basically it, absent moving focus cities around connecting them, due to G4's base here and AA's new habit of throwing 737-800s at point-to-point out of here.

  11. Will the government who is currently suing AA and B6 over their alliance allow this merger to happen? I’m not sure about that.

    1. Yeah, while the combined Spiritier does not have a lot of market share, they do have a bunch of overlapping routes and it would give one airline a lock on the fastest growing segment of the industry, setting the much smaller Allegiant and Sun Country aside. But as noted elsewhere, it is hard to see what they could give up to pass regulatory muster.

      1. They have overlapping routes, but some of those routes have very low frequency, on the Frontier side some are even LTD. If anything, increased frequencies from the merger could enhance competition.

        The AA/B6 “Northeast Alliance” is being challenged because it affects airports with little or no space for new entrants. The merged NK/F9 could be asked to give up a few gates here and there if they have any concentration at airports with gate shortages, but that’s about it. Even at LGA, their combined share should be somewhere close to WN’s 10% (Spirit has 7% now), I’m not sure if that would trigger a demand to give up any slots.

  12. To the person that said the combined entity may be able to raise fares and pay higher wages…these things are never about that. It’s about LOWERING costs and wages.

    In any case, all this won’t really matter. There is a segment of the public that wants to pay dirt cheap fare, and don’t mind being squashed and treated poorly for a couple of hours to get where they want to go.

    And they won’t care if the plane is a taxi…has animals…or if it’s white and blue with the sun drawn onto it.

    The legacies and Southwest better pay attention though, because the more they scrimp on service and frills, the less difference there is for the average traveler between them and the ULCCs.

  13. I like the Frontier name and livery (hodgepodge that it is) better than the big yellow and black eyesore of Spirit (plus can’t stand to see a Saul Bass logo be retired [again]). I think that whichever way they go they should put the spirit big front seat across the whole fleet as that seems to be a simple but meaningful perk to offer in the unbundled upsell

    On another front, this merger means one less airline that small to medium size airports will be able to lure in for service sadly. That means one less way to pressure on the legacies or carriers already serving those airports to add more service and destinations. I doubt United would be flying SYR – DEN today if the airport hadn’t snagged Frontier service there first

  14. Mr. Snyder……Do you think this Spirit/Frontier deal is a one-off event between two carriers in the smallest niche of the market (ULCC)? Or do you think this will trigger another round of M&A within the industry? Curious as to your thoughts. PS….I’m typing this from the LAX What-A-Burger. Hope to finally meet you this year.

    1. Miss – I don’t see why this would spur another round of consolidation. This feels much more like a one-off, obvious point of consolidation that shouldn’t really push anyone else to think they need to do anything. Of course, stranger things have happened.

      1. I concur. But I messed up: I was at In-And-Out Burger, not What-A-Burger. Too much Texan in me!!!

        1. There are In-n-Out Burger locations in Texas now, but I doubt any of them are close enough a spotting park to make Dorkfest Texas a reality. Still, one can dream…

  15. My suggestion for the new name, should they go with one:

    BudJet

    I’ll accept either cash or check from Bill Franke. LOL

    1. I’d suggest a close partnership with Anheuser-Busch (perhaps even paint one of the planes to look like a just-opened Budweiser can, with foamy beer on the tail of the plane, so that the plane appears to be propelled by beer?) and a “Buddy Pass” offering similar to WN’s companion pass. Bonus points if they can also secure a very obvious product placement in the next movie in the “Air Bud” franchise.

      /I’ll see myself out./

  16. I agree that this is not the opening salvo for additional consolidation. The 2022 consolidation story will be at the regional level when outliers like AirWis, CommutAir & ‘wholly owneds” like PSA & Piedmont 2.0 and the boutiques throw in the towel. My prediction is that SkyWest & Republic, will be the last ones standing with Mesa being the long shot.

    Back to the topic at hand; I really see this as more of an acknowledgment that the point-to-point leisure market has hit its saturation point. From a market’s standpoint it’s better to leverage your strengths at the top of an economic cycle then perform a merger of weaklings in a recession.

  17. Makes too much sense not to do. Should be a win for all parties except those whose jobs disappear because “synergy” found them to be redundant.

  18. “kind of like how Dallas/Fort Worth would have freaked out if US Airways survived…..”

    Can you elaborate on this?

    1. DFW – Yep, too much pride in Texas. The idea of moving the HQ out would have been a non-starter, but so would have keeping the US Airways name.
      They needed buy-in from Texas, so that wasn’t even on the table.

  19. DFW question, I can answer that one. American is huge in DFW and there are egos involved. They considered themselves the big fish. If US Airways put their name on the planes there would be hurt feelings and egos galore. Texans with hurt egos are not pretty to see…and I saw that as one who’s lived here for 58 years

    But that was still I’m sure a smaller detail. American was a much bigger name, both nationally and internationally, and it made good sense to keep it.

  20. Would love to know what is going on the the c-suites at B6, AS, and HA as a result of the proposed tie-up. I can’t see how this does not force a merger between B6 and AS soon to compete with economies of scale and route map of the big 4 and now spirit/frontier combo.

  21. Pre-Merger Announcement, F9 recently announced they’re returning to MDW, at least domestic operations. At ORD F9 operations were out of T5-Concourse M utilizing “Common Use” Gates

    At ORD NK operates out of T3-Concourse L (4-Gates) and T5-Concourse M (international arrivals)

    MDW remaining available gates are all City Controlled “Common Use” Gates. Allegiant uses at least one gate

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