America’s two largest low-cost carriers are joining forces to become one huge, super cheap airline. Frontier Airlines is purchasing Spirit Airlines in a deal that will make them the fifth-largest airline in the United States.
Frontier is putting $2.9 billion in cash and stock in the deal, the Wall Street Journal reports. The deal — which the airlines value at $6.6 billion — must still get past regulators. Both airlines say that merging will allow them to better compete with the biggest players in the industry.
Spirit and Frontier are the choice of those who want to fly thousands of miles for as little money as possible. I still can’t wrap my head around the $31 flight I took from Chicago to Denver on Spirit or the $60 flight that got me to Los Angeles on Frontier.
In exchange for cheap tickets, both airlines will charge you for just about anything, like a mobile game. Spirit makes you pay for a carry-on bag. The last time I flew Frontier, you had to pay for anything more exciting than water. And forget luxuries like screens or seats more comfortable than a city bus. But if you fly without baggage, it can be one heck of a deal.
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If allowed, Frontier will own 51.5 percent of the combined airline and will fulfill Frontier chairman William Franke’s dream of a mega low-cost airline. As WSJ notes, when Franke was Spirit’s chairman and when Frontier came up for sale in 2013, he wanted to combine the two’s forces. His private-equity firm ended up with Frontier for $36 million.
Spirit and Frontier are also often the butt of jokes about their cancelations, silly fees, and cramped cabins. Surprisingly, they are no longer the worst in the nation. According to a recent study noted by CNBC, that distinction now lands on JetBlue. Spirit is now merely just second-to-last with Frontier tied for third-last with American.
They still have a ways to go, from WSJ:
Still, the deal must get past regulators, who have taken an aggressive stance on antitrust enforcement under the Biden administration. The Justice Department last year filed an antitrust suit challenging a partnership between American Airlines Group and JetBlue Airways Corp. , describing their cooperation as a backdoor attempt to consolidate the industry and alleging that the airlines’ cooperation would suppress competition and lead to higher fares.
The Justice Department for years has been concerned about a reduction in airline competition and has been under pressure from antitrust advocates to do more to prevent it. The Obama administration initially challenged American’s merger with US Airways in 2013 but then settled the case and allowed the deal in exchange for concessions from the airlines.
The merger would reportedly combine what the airlines do best, Frontier with its western routes and Spirit out east. The pair says they’ll add 10,000 new jobs by 2026. Time will tell if the new colossus airline will be able to nickel and dime you on everything.