If you thought budget airlines were already bad, between charging for beverages and slapping customers with hidden fees for luggage, then get ready: things are about to get much worse.
Reports this week reveal how all low-cost airlines in the United States are looking to restrategize after reporting disappointing second-quarter earnings for the year. All the major budget airlines, including Southwest Airlines and Spirit, have struggled to generate the kind of profits they need to stay afloat. It’s so bad, in fact, that they’re struggling even though summer demand remains fairly high.
The problem, then? Costs.
“Summer demand remains robust and load factors have been strong; however, significant industry capacity increases together with ancillary pricing changes in the competitive environment have made it difficult to increase yields, resulting in disappointing revenue results for the second quarter of 2024,” the CEO of Spirit, Ted Christie, said as the company released its earnings.
According to the latest release, Spirit lost some $193 million, even after customers flocked to book cheap flights to destinations across the United States.
It was even worse for smaller airlines, with JetBlue reporting just $25 million and Frontier doing slightly better with $31 million. Both companies saw their profits sink dramatically, with JetBlue witnessing an 82% drop in profitability and Frontier seeing a similar crushing drop of 55%.
In response to the news – and the bleak market conditions ahead – airlines are looking for innovate ways to cut costs and increase profits. For Spirit, that looks like matching its competitors in terms of charging for snacks, drinks, and checked bags. New premium features are being added to their roster, too, allowing people to pay extra to check in before everybody else, and implementing a new Gold-level frequent flyer status.
For Southwest, it means ditching its old seating policy. Until now, Southwest had a completely open cabin seating policy. Without pre-assigned seats, passengers could choose where they sit without being forced to pay more. Now, they’ll be matching their competition for the first time in their 53 years in operation and charging customers based on their boarding group. Passengers will be charged according to the boarding group they choose, and will then be allowed to choose any seats upon boarding as long as they’re in the correct group.
But will it be enough to save them? Maybe so. After all, what other airlines can customers choose from?
