June 3, 2025
A new review of “Ultra Low Cost Carriers” including Spirit, Frontier, Avelo, Breeze, and Sun Country reveals that the entire sector is in total transition. Some are well-focused, while others are in near-panic disarray, searching for places to put excess airplanes
The traditional ULCC air transportation model is in transition, and some of these carriers, now better described as “low fare airlines” or LFAs, are trying all kinds route roulette, some of which in some cases are running them headlong into competition with network carriers, and in others experimenting with new untried routes where they have limited market identity.
In many ways, it’s becoming a race to find places for excess airliners.
Economic Gravity Won’t Be Denied. We’ll start to see fallout in the 4Q of this year. In the meantime, we’re witnessing a lot of strategic gymnastics in the LFA world.
Looking For Latent or “Impulse Demand” Routes. A couple of LFAs are adding nonstops in infrequently-served or vacant markets, like Cleveland – Boston, with day-of-week schedules. A gamble. There is no guarantee that this will meet latent travel demand. Filling a 150-200-seat airliner in a non-leisure and schedule-sensitive business market on a two or three weekly departure schedule is no slam dunk.
Another LFA is intent on adding more Florida nonstops from secondary and small airports. Nothing new here. But it is highly dependent on shaking out discretionary spending from the region. If enough is there.
If AA’s Flights Are Full, Let’s Try It. Another strategy is breaking into existing high-density major airline hub markets with low-frequency day-of-week schedules.
The goal is to grab a share of O&D passengers from American at DFW or Delta at Atlanta – where both network carriers have gigantic flow traffic to cross subsidize the route, and therefore already provide more capacity than the local O&D traffic can support.
Yet, pricing is the only competitive factor an LFA can bring to the market. It sure isn’t brand awareness. It isn’t a superior product. It isn’t convenience of schedule.
Note that some of these LFA incursions have generated high load factors, but it’s unknown if they are profitable.
The Goal Sometimes Is To Fill Seats, Instead of Carrying Customers. Where LFAs have a potentially-lethal problem – a few much more than others – is their product and their model, which is heavily dependent on low frequency, day of week schedules, with low depth of customer support.
Great when all goes well. But potentially a meltdown can occur when things operationally go south.
Think about it. Like, when there are airport flight cancellations, delays, or other chaos, passengers on some LFAs may as well just howl at the moon instead of finding somebody with a clue how they might get home when the next flight is on Tuesday, And it’s full, anyway.
When they do find a human, chances are it’s somebody working for a contractor, not the airline, and who has no personal stake in whether the customer ever flies with the airline again. But the contract rate is cheap, don’t ya know, and keeps fares low.
This is not a model for long term success.
Please, don’t miss the rule enforcement at some LFAs. They can resemble Marine boot camp. Miss a check-in time by two minutes, and it’s “give me twenty-five.” Not push-ups, but a punishment fee.
Or having contract mercenaries at the gate, literally being paid bounties to ferret out passengers who might dare to have carry-on with so much as a bag strap protruding from the sizer.
When the scofflaw is discovered, it appears justice is swift, if the many instances now posted on YouTube are any indication.
“Book ‘em Danno – shoplifting one” – the carry-on fine is $75 or be denied boarding, and there will be no discussion with the customer. (Actually, one airline CEO actually described such passengers with that term – shoplifters – people with clear intentions to break the rules.)
Good customer service would address this as a problem, not an attempted felony. The issue isn’t the rule, but how thuggishly it has sometimes been enforced, generating enough episodes on YouTube to rival Star Wars.
The Low-Cost Concept Is Evaporating. Adding to the mix is that the ability of LFA’s to truly deliver substantially lower fares is becoming a pipe dream. The “U” in ULCC went away long ago, and the “L” is under siege.
Point: Fuel cost is the same. Aircraft ownership/lease cost is the same. Maintenance costs are the same. Airport costs are the same.
It’s not uniform across the LFA genre but the model that has cabins infested with minimum-pitch seats equipped with Pampers-thin padding and in some cases not even a normal tray table, is backfiring.
Difficult to gain brand loyalty when the seats on long 3-to-5 hour flights might seem to have been designed for use during the Spanish Inquisition.
Labor is no longer a refuge. New union agreements are doing away with most of the labor cost disparities between LFA’s and network carriers.
Another issue for LFA’s is lack of fleet flexibility compared to the network carriers they are competing with. Most only operate high-density airliners, while AA, DL, and UA have fleets that run from 50-seats to 300 or so, allowing sector costs to be more compatible with demand.
All this represents challenges for LFAs. But these are just one side of the battle. Major network carriers are not the nebbish Evil Empire, anymore.
The Empire Won’t Strike Back. They’ll Let The Consumer Do It. An example is United, which has made no secret of its strategy of building on opportunities facilitated by brand strength and relative market concentration – i.e., “share” of market identity. Build on the carrier’s strengths and where the carrier is, or is close to being, the first mover regarding customer awareness.
In the past couple of months, this can be easily seen. United has capitalized on its hub system and added feed routes in existing secondary United-served cities, like PNS-DEN, BIL-ORD, MSN-LAX, to name a few, and added frequency on existing feed routes like HLN-DEN. Because of the existing identity of United in these cities, the airline doesn’t need to introduce itself to the market.
LFAs don’t have that luxury in most of the expansion efforts they’re pursuing. Certainly, when any LFA implements direct competition in major airline hub feed markets, the picture gets really funky. Remember, the LFAs’ major weakness is in the inability to quickly remediate and interface with passengers when things go IROP. The model is vulnerable.
For United and Delta, this is their weapons bay. They have the route systems, the customer service infrastructure, and the fleet flexibility to work with their customers.
Frequency and access and ability to recover from IROP conditions are competitive advantages over the LFA competition. Result: fewer unhappy customers when irregular operations arise, because these larger carriers have the customer service artillery to solve the situation.
While DOT complaint statistics are mostly anecdotal – none are investigated regarding the factors involved or validity – the raw complaint ratios fully support the paragraphs above.
Proactive: Network Airlines Now Call The Customer First. Along with this, part of the network carriers’ strategy is to implement service features such as proactive near-constant updates and communication with passengers via text messages, particularly in off-schedule situations. Relieving travel anxiety can shortstop passenger anger.
Also, giving customers a real live human contact when needed. And not one working from a contract call center in Cebu City.
And Once Belted Into The Seat, There’s A Difference. In the cabin, it’s another factor that increasingly is putting LFAs behind the 8-ball.
It’s more than having tight pitch between rows of seats with no recline, as in the case with some LFAs.
United for one is planning to implement free wi-fi for its MileagePlus members. Not an inconsequential feature. An LFA will have a tough time matching this – particularly some have seats with essentially no tray tables on which to even open a laptop.
We could also touch on the infight entertainment systems. AA and DL and UA have seat-back access to dozens of movies and informative videos. Complimentary.
The LFA Solution: The Godfather’s Strategy. It’s the Don Corleone approach: give customers products they can’t refuse. Today, consumers have lots of reasons – quantative and qualitative – to refuse the traditional LFA product offer.
LFAs: Adding A Few Bigger Seats Is Just A Start. It might be opined that additional changes can be made to attract more upscale passengers to LFAs, like adding an ersatz first-class section offering free hooch and maybe a free bag check.
The recent aggressive moves by Spirit are in the right direction. A better seat. Access to some vittles in flight, even if there is a charge. Iconic cocktail offerings provided as part of Spirit’s new identity. Maybe not things a customer cannot refuse, but they are factors that differentiate the airline.
But the majority of the LFA clientele are after lower fares, not two more inches of seat width and a complimentary scotch and soda. So that product needs to be differentiated as well. Hint: ease of use and simplicity.
Warning: Lowering Service Quality To Cut Costs Is Questionable. On the cost side, one LFA is now eschewing the use of boarding bridges, with the claim that ground level stairs will reduce airport costs and allow faster turn times. And keep fares low, too, they opine.
Okay. But not a lot of passengers walking across a rainy or snow-covered Denver ramp in 20-degree weather, or waiting to climb a set of stairs in sweltering 95-degree heat in ‘Vegas, will give a hoot about the airline’s turn times for an A321.
The carrier involved has stated that use of jetways is “the kiss of death” for airline profitability. One can only hope the strategy doesn’t plant a great big wet one on passenger reputation.
There Are Leaders. And that is just the point. There are options.LFAs such as Breeze and Avelo apparently do fully understand they are in the customer service business.
But it appears that a couple others look at the customer as being just a factor in moving airliners from point A to point B, instead of the core reason for being in business.
Dwindling Options: As it stands today, LFAs are faced with the challenge of attracting and keeping revenue when their competition is offering a better product, likely for not much more fare – if any – than the LFA.
Solution: Stake Out Turf. Or Have A Superior Product. Or Both. The verdict is already in, albeit not yet announced. LFAs have two options.
One is finding and developing and staking out their own defined and identified “turf” – be it product-defined or geographically delineated.
Allegiant has done this, based on product – focused on low-cost leisure options. Mostly. (Not real sure if PDX-FNT fits that description.)
It is also what Sun Country has done in circling their 737s mostly around a focus on developing MSP leisure markets. It’s the United concept: these airlines are concentrating where they have market strength. It isn’t limited to geographic strength but to consumer awareness for their specific product.
The only other option is to go in the direction that Spirit is apparently headed: deliver customer service that the consumer will determine has specific attractive delivery features.
And there’s no leeway for YouTube events.
Write this down. The LFA genre does have potential in the USA air transportation system.
But it needs a new direction, and some of the players seem not to have any direction.
And maybe, a need for a lot fewer airplanes, too. Film at 11.
Or maybe in the 4Q of 2025.