I sometimes use my mom (who loves birds, but not really planes) to help guide what we cover on AirlineReporter. Typically if she mentions “Hey did you see this story about an airline?” we have a nice conversation about it, but that typically means it has been well covered and unless we have a unique opinion, we move on. So, it feels special when my mom brings up a story she saw, and I have a few thoughts to add.
If you missed it, Frontier Airlines has opted to ditch their customer care call center, while still providing online support – all in the name of bringing down costs. Unless you are new to following the airline biz, we have seen this sort of thing a few times now. An airline announces some change to “save money to pass down to passengers.” Many media outlets cover it with the tone, “here is an airline looking to screw you over again.” Passengers, some who never have flown the airline, will flow to social media with the tone “HOW DARE YOU SCREW ME OVER AIRLINE, I WILL NEVER, EVER FLY YOU AGAIN!!!”
Even though I have come to roll my eyes with this sort of rinse and repeat narrative, I decided that I wanted to dig a bit deeper on this one. Why does this keep happening? Who is to blame? Is it the “evil” airlines and their greed? Or is it something much closer to home? Spoiler: I found answers!
We thought those animals on the Frontier Airlines livery were just hanging around looking cute. Turns out they were biding their time, plotting. And now they’ve made their move.
That otter definitely looks like the scheming type – Photo: Frontier Airlines
Frontier just announced its planned purchase of fellow ultra-low-cost-carrier Spirit Airlines. The result will be a low-cost juggernaut, ranking fifth in size among America’s airlines. One of our more prescient contributors, Steven Kimball, suggested this merger back in 2016. And from the airlines’ perspective the merger makes a lot of sense.
Obviously there’s the similarity in their approach to bare-fare pricing and bare-bones service. But also the all-Airbus narrowbody fleet, which will definitely contribute to a smoother merger and operational synergies. Both airlines operate the A320neo, and the new combined fleet will boast great fuel efficiency (cramming a ton of passengers into each plane also helps efficiency, I guess).
Image: Spirit Airlines
What’s the upshot for passengers? The airlines are trying to spin this as a positive, with Frontier loyalists getting better access to Spirit’s network in Central and South America, and Spirit-ers gaining more destinations in the western United States. The combined airline’s heft may help it better compete with the big four. At the same time, this means fewer individual airlines within the ULCC segment, which may drive up fares in that part of the market.
Also it’s no sure thing that the government will approve this plan. On one hand, the current administration has expressed a desire to keep inter-airline competition strong, and has been less friendly to mergers and partnerships. On the other hand, the administration is a little more embattled now and may not want to pick this fight. Or they may buy into the two airlines’ argument that a larger fifth player in the market is better for competition overall.
Will you be smiling that much when you fly Basic Economy? Photo: United Airlines
Even though the vast majority of my flying is in economy, it’s sometimes hard for me to know exactly what economy class is anymore. In the good old days, it reliably meant a seat with enough legroom, a drink, a snack, and my fair share of space in the cargo hold. But under pressure from ultra-low-cost carriers, U.S. legacy airlines have chipped away at what they offer travelers seated aft of the wing.
That trend took a major jump forward — or, depending on your perspective, backwards — with the introduction of new no-frills “Basic Economy’ fares that do the bare minimum to get you from Point A to Point B. Delta announced the rollout of its Basic Economy in select markets in late 2014, and has expanded it to other routes since then. United unveiled its own basic product late last year. Earlier this week, American shared that its own Basic Economy fares will be going on sale in February, starting with ten markets.
Is this new category of barebones fares good news for price-sensitive flyers? Or is it a new circle of hell in the sky? Read on for more on Basic Economy and what it means for you.
An Air France Airbus A318. The airline is the world’s largest operator of the A318. Photo: Thomas Becker
The last Airbus A318 operated by a North American airline has exited service. The A318, sometimes affectionately referred to as the “Babybus,” is the smallest member of the Airbus A320 family. Weighing nearly the same as its larger brother, the A319, and operating with the same crew requirements, the economics of operating the A318 in North America just didn’t make sense. The similarly-sized Boeing 737-600 has largely suffered the same fate (although WestJet still operates a fleet in Canada).
There has been a lot in the news about airline mergers and buy outs. Delta & Northwest, United & Continental and most recently AirTran & Southwest. Some in the media throw around “merger” and “takeover” interchangeably, but they are very different. When two airlines come together, there are two types of sale agreements: the merger and the takeover.
I got an email from a reader (thanks Jay) asking about the difference between an airline merger and take over. I am not a financial professional, but I want to try my best to point out the major differences. If you have any more to add, please feel free to leave a comment!
This is when two companies come together blending their assets, staff, facilities, and so on. After a merger, the original companies cease to exist, and a new company arises instead. Sometimes the new entity will take the name and brand from one of the airlines, but sometimes an entirely new brand can be created.
Delta and Northwest merged, leaving the Delta brand. United and Continental merged, which will leave the United brand. In mergers like these, management needs to work hard to come to certain agreements, figure what/who will be cut and how the new airline will operate. Of course, this can be a very complex process for both airlines to undertake.
TAKE OVER / BUY OUT / ACQUISITIONS
In a takeover, a company is purchased by another company. The purchasing company owns all of the target company’s assets including company aircraft, trademarks, routes and so forth. The original company may be entirely swallowed up, or may operate semi-independently under the umbrella of the acquiring company.
In the case of Southwest buying out AirTran, the AirTran brand will disappear and be absorbed by Southwest. It is not a merger and Southwest will own the assets of AirTran and have complete control. This process is easier than a merger, since management at Southwest has the final say, but they need to successfully share their culture with the employees at AirTran and make sure they feel welcome.