Are Budget Airlines Facing Extinction?

Jessica Mendoza (0:05)

For years, budget airlines have reminded customers of an important lesson. You get what you pay for.

Alison Sider (0:14)

The tray tables are made for amps, so tiny.

SPEAKER_3 (0:16)

You have to pay for water.

SPEAKER_4 (0:18)

I thought that was complimentary.

Alison Sider (0:19)

No, nothing's complimentary on a budget airline. The seats were so uncomfy, like zero padding.

SPEAKER_4 (0:25)

They oversold their flights, and then they pick random people to bump off the flight. So I was one of those random people.

Alison Sider (0:31)

The plane was boiling.

Jessica Mendoza (0:33)

But people who want to travel cheap have flocked to budget airlines, because the price is so right.

Alison Sider (0:40)

So sort of the peak of the budget airline era, which is maybe 10, 12 years ago, this seemed like it was going to be the dominant business model.

Jessica Mendoza (0:50)

That's our colleague Alison Sider. She covers the airline industry.

Alison Sider (0:53)

Budget airlines were growing really quickly, expanding into major airline hubs, and taking a lot of passengers, and the big airlines felt they needed to find a way to compete. I mean, it seemed like this was going to be a real challenge to the bigger airlines.

Jessica Mendoza (1:13)

But budget airlines haven't lived up to that challenge, and lately, they're a dying breed. Spirit Airlines went under earlier this year. Formerly beloved Southwest is facing headwinds. Now Frontier is trying to turn around its business before it's too late.

What happened to the budget airline?

Alison Sider (1:33)

I mean, the business model is really facing, in some ways, existential challenges. For the last several years, these airlines that were once the fastest growing, most competitive, most disruptive, now they're kind of on the back foot, and they're having trouble competing with the legacy airlines.

I think the future for budget travel is a little bit uncertain.

Jessica Mendoza (1:57)

Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Tuesday, September 15th.

Coming up on the show, are budget airlines facing extinction?

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Jessica Mendoza (2:59)

One of the last major budget airlines in the US is Frontier.

It's based in Denver, and its planes are recognizable, painted white with forest green lettering, with a different animal on every plane's tail. In the 2010s, Frontier went all in on the budget airline model.

Alison Sider (3:17)

Frontier Airlines is one of these low-cost airlines. Their ticker symbol is actually ULCC, ultra low-cost carrier, like that's how much they sort of wanted to embody that business model.

Jessica Mendoza (3:29)

Own that identity.

Alison Sider (3:30)

Yes. Spirit was sort of maybe the best known. It had the bright yellow planes, and a lot of the like swagger and personality.

Frontier really had a very similar business model. They kind of share some common roots with Spirit.

Jessica Mendoza (3:43)

Not to speak ill of the dead here, but Spirit was the butt of a lot of jokes on social. What's Frontier's reputation like?

Alison Sider (3:52)

In general, the budget airlines, like you said, are often fodder for late-night comedy.

Maybe Frontier wasn't as notorious as Spirit on that front, but Frontier actually has had a pretty rough operation over the years. Just not the most reliable, often towards the bottom of the list for untimed performance or cancellations, or bumping, or what have you. I flew Frontier Airlines, so you don't have to. Really, don't.

SPEAKER_6 (4:19)

Word to everything, word to my mother. I will never a day in my life book Frontier Airlines.

SPEAKER_7 (4:28)

My Frontier review, only book if you're brave and desperate.

Jimmy Dempsey (4:31)

Sometimes in life, you get what you pay for.

SPEAKER_9 (4:33)

And sometimes, you get screwed.

Jessica Mendoza (4:39)

Frontier has said that it has made strides in improving its operation and reducing the number of cancelled flights.

Alison Sider (4:46)

So, you know, and then plus, it is just, it was sort of by design, a more bare bones experience. I'm not going to have a meal, like you're going to be paying for any sort of extras that you want, you know, it's certainly just not a luxurious experience.