All major American low-cost airlines have reported their results for the second quarter of 2024, and the numbers do not look good.
Despite strong demand for summer flights, low-cost carriers such as Spirit and Southwest Airlines struggled to make a profit.
“Summer demand remains robust and utilization has been strong; however, significant capacity increases in the industry along with additional pricing changes in the competitive environment have made it difficult to grow earnings, resulting in disappointing revenue results for the second quarter of 2024,” Spirit CEO Ted Christie said in the company’s earnings release.
From April to June, Spirit Airlines lost $193 million.
Frontier earned $31 million and JetBlue $25 million in the same quarter. However, the two airlines reported a profit decline of 55% and 82% respectively compared to the same period last year.
Southwest had the group’s best second quarter, reporting a profit of $367 million, but even that is a 46% decline compared to the second quarter of 2023.
These airlines are doing everything they can to try to fix the situation, including changes to ticket prices, capacity and route cuts, new premium options and more. These could lead to higher ticket prices and new fees for things that passengers previously expected to be free.
JetBlue will postpone upcoming deliveries of Airbus A321neos like the one pictured until after 2030. Nicolas Economou/NurPhoto via Getty Images
Spirit completely revises its ticket sales
The Florida-based airline recently announced plans to bundle previously a la carte items such as free snacks and checked baggage into categories that would bring the low-cost carrier more in line with its competitors.
New premium perks announced include priority check-in and boarding for premium passengers, Spirit credit card holders and Gold frequent flyers.
Spirit’s new ticket packages will be available starting August 16 for flights departing August 27.
Spirit Airlines offers its customers new premium benefits. Mario Tama via Getty Images
Southwest abolishes its famous seat policy
In July, Southwest announced plans to abandon its open cabin seating policy and begin selling premium seats.
The lack of pre-assigned seating is a hallmark of Southwest Airlines and has angered many loyal customers online. (The airline says its research has shown that passengers prefer assigned seating.)
Unlike other airlines, Southwest has never assigned seats in its entire 53-year history. Instead, each passenger is given a boarding group number. Once on board the plane, they are allowed to sit in any available seat.
Southwest’s new seating policy, expected to take effect in early 2025, will help generate additional revenue.
Airline analysts at Raymond James estimate that the allocated seats could generate up to $2 billion in revenue for Southwest in the short term.
Frontier concentrates its flights on certain days.
Frontier Airlines plans to reduce the number of flights on Tuesdays and Wednesdays due to low demand. Instead, the airline will focus on high-demand travel days such as Mondays and Fridays.
“While consumer travel demand has remained stable on peak days of the week, post-pandemic travel patterns have forced us to concentrate our flights on peak days,” said Barry Biffle, CEO of Frontier Airlines, in a press release.
Frontier is canceling flights on Tuesdays and Wednesdays. Elizabeth Page Brumley/Las Vegas Review-Journal/Tribune News Service via Getty Images
Jetblue saves money by delaying delivery of new aircraft
Jetblue announced in July that the delivery of more than 40 Airbus A321neo jets that were due to be added to the airline’s fleet over the next few years would be delayed.
“We are in the process of restoring our balance sheet and are announcing a gradual deferral of planned aircraft investments of approximately $3 billion to secure our financial future,” said Chief Financial Officer Ursula Hurley in a press release.
Instead, delivery of the aircraft has been postponed until the next decade, with the first aircraft expected to arrive before 2030 or later.
Low-cost airlines flooded the market with too many cheap tickets
Airlines in all sectors struggled with rising costs and falling margins last year.
However, unlike major airlines, low-cost airlines do not have the advantage of high-margin business and first-class cabins with which they can earn extra money.
In order to generate revenue and fill the planes, they flood the market with cheap seats.
Competing airlines such as United and Delta consider this strategy unsustainable.
