Spirit Airlines Is Feeling Pressure From the Major Carriers' Basic Economy Fares

Daily Newsletter

Reward your inbox with the TPG Daily newsletter

Join over 700,000 readers for breaking news, in-depth guides and exclusive deals from TPG’s experts

Email address

Sign up

By signing up, you will receive newsletters and promotional content and agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.

With the launch of basic economy fares from all three legacy carriers in the US, Spirit Airlines says it's starting to feel the pinch of increased competition in the low-cost segment. The comments about the growth of basic economy fares came during the carrier's quarterly financial reports call.

Skift reports that during the call, Spirit's chief executive Robert Fornaro spoke to the increase of the bare-bones airfares and their effect on the company's business model. Prior to 2015, Spirit and low-cost competitor Frontier Airlines were the only airlines offering discounted fares across the United States in exchange for reduced benefits. However, as American, Delta and United expanded their offerings to include discounted economy fare options, consumers now have more choices in which carrier they fly with at their preferred price point.

Although each of the legacy airlines will begin offering their own versions of basic economy in 2017, the timing and application will vary. Delta is offering basic economy on select routes, while United Airlines will begin its basic economy rollout in Minneapolis. American Airlines announced it would begin introducing basic economy fares in 10 locations across the country, before expanding it to other routes throughout the year.

Spirit's amenities line up closely with those offered with American and United basic fares: Travelers are allowed only one personal item free of charge, with the option to purchase upgrades online or face higher charges at the airport. Although Delta is slightly more generous, allowing basic economy passengers to carry on two items — one for the overhead bin — Fornaro told investors that the airline is competitive with Delta in the markets where they compete, including Atlanta.

Despite the new basic economy competition, Spirit is continuing with its plans to grow in the coming year. The airline will launch 16 new route combinations between March and June 2017, including several out of Baltimore. In addition, the carrier will also continue to move forward with plans to add 15 aircraft (caution: PDF link) to its fleet.