Could Frontier Airlines and Spirit Airlines eventually merge after all?
“That’s my prediction,” the CEO of a competing low-cost airline told TPG.
Talks have been going on for years about the possibility of the country’s two major budget companies joining forces.
Spirit and border explored merger in 2022but spirit he withdrew from the talks instead, seek a marriage with JetBlue, an agreement ultimately blocked in court by the Biden administration.
Then, late last year, The Wall Street Journal reported that the airlines had revived acquisition talks. However, the agreement supposedly fell apart days before the spirit announced that it had filed for Chapter 11 bankruptcy protection.
Spirit’s financial turmoil, due to mounting debt, falling revenue and a myriad of other factors, came amid a tumultuous run for low-cost airlines in general.
A more complicated outlook for low-cost airlines
In recent years, the lowest-cost segment of the US airline industry has lost ground to large “legacy” carriers, which have long-haul international routes with scores of travelers are craving right now. Not to mention, larger airlines offer amenities like premium cabins, lie-flat seats, and those highly lucrative credit card and frequent flyer programs that have played a huge role in profitability since the coronavirus pandemic.
Some in the industry (United Airlines CEO Scott Kirby, most loudly) have predicted the disappearance of some low-cost airlines, notably Frontier and Spirit. These airlines have long been known for offering ultra-low base fares, but they add fees for most other onboard services.
In a wide-ranging interview last month with TPG, low-cost airline executive David Neeleman, CEO of Breeze Airways, offered his own opinion.
Daily newsletter
Reward your inbox with TPG’s daily newsletter
Join over 700,000 readers to receive breaking news, in-depth guides, and exclusive offers from TPG experts.
“I think Spirit and Frontier will survive,” Neeleman said. “But I think it would be a lot easier if they merged. If they became one.”
When asked if he would openly predict a future merger between the two companies, Neeleman didn’t mince words: “Yes,” he said.
Both airlines have repeatedly declined to comment on lingering merger or acquisition talks. It may also be worth noting that the incoming Trump administration is expected to take a less stringent regulatory stance than the previous administration, perhaps encouraging another attempt at consolidation.
Low-cost airlines look for premium offers
Either way, Neeleman said he generally agrees with a direct assessment United’s Kirby has made about the state of the U.S. airline industry, namely about the Chicago-based carrier’s advantage over low-cost carriers. (of which Breeze is one).
Repeatedly in 2024, Kirby asserted United’s “structural, permanent and irreversible” advantage in the industry, along with that of Delta Air Lines.
Now that major airlines have mostly eliminated change fees and added their own types of basic, economy economy fares, Kirby and others have wondered why travelers would opt for a budget airline if a similar fare is available on a full service airline. .
Other low-cost airline executives have dismissed predictions about the industry’s demise.
“That’s funny,” Frontier CEO Barry Biffle said sarcastically, referring to the claim in an interview with TPG last month.
But Neeleman offered a slightly different view.
“Scottish [Kirby] “They’ve figured out a way to make people on United get the same thing they get on Spirit, knowing that no one would choose to fly Spirit if they can come and fly United,” Neeleman said.
“If you get on a United Airlines [Boeing 737] MAXIMUM 9 [jet] today, it’s perfectly configured for what people want,” Neeleman continued, highlighting United’s offerings ranging from first class to extra legroom to a basic option.
It’s a broader menu of features that travelers can also find on Delta and American Airlines. This variety is also in the works at a fast-growing list of low-cost airlines: Frontier announced new first-class-style seats in December, Southwest has new rows with extra legroom planned for 2026, and JetBlue plans to add domestic first class. cabin. (Neeleman is perhaps best known in the United States for founding JetBlue in 2000.)
Breeze sees an opportunity
Today, Neeleman believes that travelers’ changing preferences (i.e., the yearning for rows with more space, premium seating, and generally more options) bode well for his latest startup, Breeze. The airline launched in 2021 at the height of the coronavirus pandemic.
Since its launch, the Utah-based airline has offered free luggage, Wi-Fi service and first-class recliners for passengers who select its “Nicest” fares. These fares are an alternative to the classic low fares of budget airlines (“Nice”) for those bargain shoppers.
“When I go up against those guys,” Neeleman said of Spirit and Frontier, “we do very well. Because people want to fly Breeze.”
Of course, your airline could face more competition in the coming years as travelers find more and more options for extra space on the planes of more and more low-cost airlines. This is a key reason why Breeze is “really seriously considering” increasing the number of “Nicest” seats on board its Airbus A220s, Neeleman said.
“We started with 24 [first-class seats on board] and we went to 12, and I think we are seriously considering going back to 16 because there is so much demand,” he said, noting that the airline can reconfigure its planes “overnight” to make such changes.
International flights on the horizon
But what about international service?
The last time I spoke with Neeleman, about eight months ago, he mocked a upcoming international expansion linked to significant long-term growth plans at Rhode Island’s TF Green International Airport (PVD) in Providence.
In fact, Avelo, Breeze’s emerging airline companion, which also launched in 2021, beat him to the punch with new services to Mexico, Jamaica and the Dominican Republic from Hartford’s Bradley International Airport (BDL) and North Carolina’s Raleigh-Durham International Airport (RDU). BDL and RDU are airports where the two newcomer airlines have focused enormous attention.
Neeleman cited delays in Federal Aviation Administration approvals that would allow Breeze to fly its planes internationally. That process should conclude by the end of March, he told TPG.
“And then we can go to Hawaii, sort of the North Atlantic, mainly the British Isles and Ireland. Places like that,” he said.
But up first?
“Mexico, Dominican Republic, Jamaica, that kind of thing,” he said.
Breeze currently offers 280 nonstop flights and has no competition on 86% of them, the airline said this month.
Its growth is expected to continue in 2025. According to data from aviation analysis firm Cirium, its number of seats in the first half of this year will increase by around 49% compared to the same period last year.
It remains to be seen whether that focus will focus on domestic or international flights, or economy or premium cabins, amid a historic shift in traveler preferences. Stay tuned.
Related reading:
