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Should You Choose a Low-Cost Carrier Over a Major Airline?

May 19, 2016
9 min read
Should You Choose a Low-Cost Carrier Over a Major Airline?
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Thanks to JetBlue's Mint class, Virgin America's innovative first class and potential improvements to Southwest's offerings, smaller US carriers are starting to look a lot more appealing. In light of this, TPG Senior Points & Miles Contributor Jason Steele takes a look at which airlines are best for which travelers.

Like many people, I grew up flying carriers like Continental, Eastern, Pan Am and TWA. Those days are long gone, as travelers are now faced with a new choice between the remaining legacy carriers and newer discount airlines.

In today's post, I want to explore how popular notions about airline service may be overturned, as the discount carriers look to move upscale while the majors are quickly starting to offer no-frills tickets at cut-rate prices.

Southwest Considers Offering More Perks

In many ways, Southwest Airlines deserves to be considered a "major" carrier, as it serves more domestic passengers than any other airline and is rapidly expanding international service to Mexico, the Caribbean and Central America. Nevertheless, it still offers few perks for its elite travelers and no airport lounge network.

Southwest survey
A survey sent to Southwest customers.

But that might be changing. Southwest recently circulated a survey to gauge its customers' interest in receiving a range of new perks including airport lounges, Global Entry application fee credits and lifetime elite status.

Presumably, Southwest is considering offering some or all of these benefits to its frequent travelers with elite status. It's also interesting to note what's not in this survey, such as a first class or expanded legroom section, or any changes to its popular Companion Pass benefit.

Other Carriers Now Offering Premium Service

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JetBlue Mint is one of TPG's favorite options for domestic flights.
JetBlue Mint is one of TPG's favorite options for domestic flights.

JetBlue surprised many when it added premium Mint service to some of its flights, with lie-flat seats and dining that compares more closely to international business and even first class than the legacy carriers' domestic first-class experience. The airline offers Mint service on flights from New York-JFK to LAX, San Francisco, Aruba and Barbados, and it also recently expanded Mint service to flights between Boston and San Francisco, LAX and Barbados, with several additional new routes in the works.

On a recent flight from New York to San Francisco, TPG was blown away by the qualify of the food, service and overall experience. Furthermore, he noted that Mint class flights start at $599 each way — about half the cost of most comparable American Airlines business-class itineraries when booking a one-way flight. As TPG Contributor Mitch Berman explained, JetBlue is in some ways responsible for airlines driving down the cost of premium-cabin transcontinental fares overall.

Another non-legacy carrier offering premium service is Virgin America. I was able to attend the celebration for its inaugural flight to Denver and spend a few minutes sitting in the airline's first-class seat while interviewing Virgin Group's founder Sir Richard Branson. I was surprised to find that the first-class seats include a foot rest, massage functions and an extremely generous 55 inches of pitch, about 18 inches more than the domestic first-class seats offered by the legacy carriers. Plus, all passengers enjoy a stylish interior, mood lighting and a state-of-the-art in-flight entertainment system.

Alaska Airlines also fits into this picture somehow, though it hasn't made any huge upgrades to its offerings recently. While it does have a first-class section and a handful of lounges, it doesn't offer intercontinental service or a premium transcontinental product, though that will change following its upcoming acquisition of Virgin America.

Choosing the Right Carrier for Your Needs

Choosing between a carrier like Virgin America and the legacy airlines comes down to your travel preferences.
Choosing between a carrier like Virgin America and the legacy airlines comes down to your travel preferences.

What we're now seeing is actually three types of airlines competing for your business. Where there used to be just full-service legacy carriers and discount carriers, there's now a new crop of ultra-discount carriers that rushed to fill the void left when carriers like JetBlue and Southwest stepped up their services (and, to some extent, their prices).

Allegiant, Frontier and Spirit will all charge extra for seat assignments, in-flight beverages (other than water) and even a carry-on bag. Nevertheless, these airlines can offer you super-low-cost tickets, especially when you're able to avoid baggage fees by traveling with just a carry-on as a "personal item" that can (but doesn't have to) fit under your seat. Just don't expect much in terms of service, comfort or flexibility in the event of delays or cancellations. And while Frontier and Spirit offer miles for paid flights, their programs are vastly inferior to other airlines due to the myriad of fees and quickly expiring miles.

Next are the "discount" carriers JetBlue, Southwest and Virgin America — and debatably Alaska. These airlines are betting that they can offer you superior comfort and service in economy class, at similar prices to American, Delta and United. For example, JetBlue offers free Wi-Fi on board, and Southwest offers free television streaming over Wi-Fi. In fact, I found JetBlue's free in-flight Wi-Fi to be as fast as some wired connections that I've used on the ground! In addition, JetBlue and Virgin America's premium-class products are now running circles around the legacy carriers' standard domestic first class.

With the exception of Alaska, these airlines offer frequent flyer programs that are largely revenue-based. According to TPG's latest monthly valuations, Southwest points are worth 1.5 cents each, JetBlue points are worth 1-1.4 cents each and Virgin America points are worth 1.5-2.3 cents each. These revenue-based programs can be better for finding multiple award seats at reasonable prices during peak periods, provided you redeem your points far in advance. Yet, these programs lack links to smaller, regional destinations as well as participation in a global airline alliance — though Alaska miles and Virgin America points can be redeemed on some of their international partners.

And unlike the ultra-low-cost carriers, these mid-range carriers participate in flexible point transfer programs and feature compelling credit card offers for award travel enthusiasts.

  • Southwest — The airline offers the Southwest Rapid Rewards Premier Credit Card, the Southwest Rapid Rewards Premier Business Card and the Southwest Rapid Rewards Plus Credit Card. Southwest is also a transfer partner of Chase's Ultimate Rewards program.
  • JetBlue — The carrier offers new applicants three cards from Barclaycard: the JetBlue Plus Card, the JetBlue Card and the JetBlue Business Card. It's also a transfer partner of the American Express Membership Rewards program.
  • Virgin America — The airline offers two cards from Comenity Capital Bank: the Virgin America Visa Signature Card and the Virgin American Premium Visa Signature Card. It's a transfer partner of both American Express Membership Rewards and Citi ThankYou Rewards.

The Case for Legacy Carriers

Do you travel to places like Montgomery, Alabama or Cincinnati, Ohio? If so, don't expect to fly there on JetBlue, Southwest or Virgin America. The best case for legacy carriers is that they offer nonstop service from their hubs to smaller destinations. Likewise, if you're looking to purchase a single ticket to an overseas destination, American, Delta and United are often the best choices among international carriers, although Alaska and JetBlue offer growing lists of codeshare partners. The legacy carriers also feature large airport lounge networks and first-class or business-class service on nearly all flights.

From an award travel standpoint, the legacy carriers continue to offer zone-based award redemption, rather than revenue-based awards. This is ideal for premium-class international awards as well as when you're booking at the last minute and cash fares are high. These carriers also offer a range of credit cards and participation in flexible point transfer programs:

  • American — The carrier's lineup of cards includes the Citi AAdvantage Executive World Elite Mastercard and the Citi AAdvantage Platinum Select World Elite Mastercard. For more information, see my post on the best cards for flying American. It's a transfer partner of the Starwood Preferred Guest program.
  • Delta — Card options include the Gold Delta SkyMiles® Credit Card from American Express and the Gold Delta SkyMiles® Business Credit Card from American Express. For more info, see my post on the best cards for frequent Delta Flyers. Delta is a transfer partner of American Express Membership Rewards and Starwood Preferred Guest.
  • United — The airline offers the United MileagePlus Explorer Card, the United MileagePlus Club Card and a few other options from Chase. United is a transfer partner of the Chase Ultimate Rewards program.

The information for the Citi AAdvantage Platinum card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

In addition, the three legacy carriers offer elite status programs that include upgrades to premium economy sections with extra legroom and even complimentary first-class upgrades, albeit to an increasingly limited extent.

Finally, the legacy carriers are now starting to offer lower fares with no frills in order to compete with ultra-low-cost carriers. Delta began by offering Basic Economy fares that are non-changeable, don't let you choose your seat assignment and are not eligible for most elite status perks — and American and United are expected to follow suit with similar plans. While these discounted fares are not much less expensive than other economy fares, you may soon find yourself booked in this class as some companies require their employees to book the lowest available fares.

Bottom Line

There's no denying that airlines like JetBlue are becoming more competitive, offering additional features and even adding premium-cabin seats. At the same time, due to their more limited route networks and smaller loyalty programs, they might not align with your travel needs. By comparing the new features of the legacy and "discount "carriers, you can choose the airline that works best for you.

Do you prefer smaller carriers like JetBlue or the big three legacy US airlines?

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Featured image by Southwest gets a bump to Rapid Rewards this month.