Why budget airlines are suddenly going premium
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Illustration: Aïda Amer/Axios
Historically low-cost airlines are suddenly embracing premium upsells like extra legroom and priority boarding in a bid for more revenue.
Why it matters: Economy-plus fever is gripping the airline industry, potentially leaving fewer seats for travelers who want to save a buck or two and don't mind being stuffed back in coach.
Driving the news: Spirit Airlines recently unveiled a new tiered fare model with four levels of service, ranging from the no-frills "Go" option all the way up to "Go Big," which includes bigger seats, in-flight snacks, priority boarding and more.
- That came just a few days after Southwest Airlines announced that it, too, will roll out premium seating — and even abandon the open seating model it's famous for.
- JP Morgan analysts, meanwhile, expect JetBlue to go big with domestic first class service next year — perhaps, delightfully enough, called "Junior Mint." (JetBlue's current first class offering, Mint, is largely reserved for transcontinental and international flights.)
Zoom in: "JetBlue is currently sitting out the domestic first class market ... basically the market that Delta has successfully monetized, having lifted its paid domestic load factors from ~15% to >70% since 2009," reads a recent note from JP Morgan senior airlines analyst Jamie Baker.
- JetBlue did not respond to Axios' request for comment.
The big picture: These changes come as the "Big Three" airlines — Delta, United and American — are pushing hard on economy-plus style offerings amid high fuel and labor prices and airplane production issues, which limit their growth.
- Longstanding budget airlines like Southwest are also feeling the squeeze from below, with ultra-low-cost rivals such as Frontier and upstarts Breeze and Avelo competing for no-frills flyers.
What they're saying: "What we're seeing is basically a structural change for these low-cost airlines," says David Slotnick, senior airline business reporter at The Points Guy.
- The idea, Slotnick says, is to be "more like a fancier bus, with nicer seats up front, and they can make more money selling them."
Between the lines: Southwest is under pressure from activist investor group Elliott Management, which wants big management and operational shakeups in the wake of the airline's infamous 2022 meltdown.
- Spirit and JetBlue, meanwhile, are both seeking a path forward after a federal judge earlier this year blocked their merger on antitrust grounds.
- JetBlue is also undergoing massive route map changes as it seeks to navigate a suddenly uncertain future.
Reality check: Even famously no-frills airlines like Spirit have long offered upsells, like that airline's "Big Front Seat."
- And travelers still have some ways to fly on the cheap if they want to — which many do.
- But they'll be missing out on perks enjoyed by those just a few rows ahead of them. (Oh, and goodbye reclining seats — though maybe that's for the best.)
💬 Our thought bubble: Offering more creature comforts is all well and good, but if lower-cost airlines really want to compete with the Big Three, they'll also need to focus on operations and on-time performance.
The bottom line: Expect your next flight to come with plenty of attempts to squeeze more money from you.
