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Is it just me, or are airlines more prone to mergers than other industries? In recent memory, I can think of Continental and United, Delta and Northwest, US Airways merging with American Airlines, Southwest and AirTran, Alaska and Virgin America … and there are probably more that I’m either forgetting or happened before I started paying much attention to the airline industry.
This week, Frontier Airlines and Spirit Airlines said they would merge, subject to regulatory approval.
What the Deal Could Mean for Consumers
Here’s an excerpt from the news release announcing the merger between Frontier and Spirit, which describes the combined company as “America’s most competitive ultra-low fare airline.”
Consumers Win With More Ultra-Low Fares to More Places
The combined airline is expected to:
- Deliver $1 billion in annual consumer savings.
- Offer more than 1,000 daily flights to over 145 destinations in 19 countries, across complementary networks.
- Expand with more than 350 aircraft on order to deliver more ultra-low fares.
- Increase access to ultra-low fares by adding new routes to underserved communities across the United States, Latin America and the Caribbean.
- Deliver even more reliable service through a variety of operational efficiencies.
- Expand frequent flyer and membership offerings.
Spirit and Frontier Merger Details
There’s a new website, EvenMoreUltraLowFares.com, that has more details on the merger. A few interesting nuggets of information:
- They expect the merger to close in the second half of 2022.
- It should probably go without saying to anyone who is reading this site, but this doesn’t mean that you can use your Spirit ticket or points on Frontier or vice versa. Even after (if) the merger closes, it will still take time to merge the two companies’ systems.
- The airlines claim that this will “deliver $1 billion in annual consumer savings.”
- If approved, this would make the new Frontier the 5th largest airline in the US and the largest ULCC.
My Thoughts on the Spirit and Frontier Merger
I am generally skeptical of mergers being good for consumers, though of course there remains a lot to be seen. There’s no doubt that there are some areas of overlap where I could understand how there would be close to $1 billion in savings. Whether that gets passed down to the consumer (vs. sent to the shareholders) — call me skeptical.
It will also be interesting to see how easy the regulatory approval process is. I have seen a few articles question whether the Biden administration will even approve this merger. My personal (non-insider) opinion is that it will be approved — after all, there are still 4 other airlines that are larger and while there is some overlap, the combined airline still represents a fairly low percentage of overall traffic. Perhaps it would be required to divest some airport slots / city-pair routes.
The Bottom Line
Frontier Airlines and Spirit Airlines have announced their intentions to merge by the second half of 2022. The new Frontier Airlines would be the 5th largest airline in the United States, pending regulatory approval. The companies suggest that the merge will “deliver $1 billion in annual consumer savings” (air quotes mine based on my skepticism). Time will tell if this merger is approved and/or what the impact will be for consumers and/or the frequent flyer programs of the new airline.
What do you think of the proposed merger between Frontier and Spirit? Leave your thoughts in the comments.
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