JetBlue Airways has reached an agreement to buy Spirit Airlines. But the acquisition is not yet cleared to take off. Consumers and regulators have reason to fear that this merger will drive up airfare prices for everyone. And some budget travel experts are already voicing their concerns. travel budget.
To safeguard. Why does JetBlue want to buy Spirit?
Currently, domestic air travel is dominated by the “big four” airlines: Delta, American, United and Southwest. A JetBlue-Spirit merger would create the country’s fifth largest airline. And would allow JetBlue to compete with larger carriers by obtaining additional planes and flight plans. JetBlue says its goal is to keep fares low, but some industry professionals warn the merger could actually do the opposite.
Could fewer airlines mean higher fares?
One of the reasons industry professionals — not to mention regulators — are wary of the merger is that it could reduce competition. One less airline in an already consolidated market could spell trouble (read: higher prices) for consumers (hi, budget travelers).
Scott Keyes, the founder of the travel site Scott’s Cheap Flights, is among the critics of the proposed merger because of the impact it could have on flight prices. “Spirit’s low fares are causing Delta, United, American and all the other airlines to also offer lower fares to try and compete,” Keyes told Skimm Money. If super-cheap Spirit flights don’t drive prices down, competing airlines could raise fares.
Travel has become increasingly accessible over the past few decades. Because more low-cost carriers entered the market and drove prices down. Removing Spirit altogether would likely increase pricing. But JetBlue could model its business with Spirit under its wings (sorry) in a way that benefits travelers.
Tell me more. What is the potential benefit?
If you’ve flown with Spirit Airlines or other budget carriers like Frontier, you probably know you’re getting what you pay for. You don’t expect an in-flight movie on your $30 flight to Vegas. JetBlue thinks it can improve that experience by bringing some of its amenities (hi, leg room) to Spirit planes. But of course, this may defeat the purpose of a low-cost airline if passengers are expected to pay for these upgrades.
Keyes says the business model of Spirit and similar airlines is what has made travel more accessible and low-cost carriers competitive with industry leaders. “The number of people who can afford to fly has increased dramatically over a 20 to 30 year period,” says Keyes. “But that doesn’t necessarily mean they can afford business class or first class.” And as passengers flock to cheaper fares, budget airlines are taking market share from the “big four”.
Major airlines like Delta and United make most of their money from business and luxury travel. On the other hand, low-cost carriers make a profit by skipping the bells and whistles and focusing on necessity: simply transporting people. “Budget airlines are really focused on leisure travelers and what they want,” says Keyes. “And when you look at survey data, look at booking behavior, what they want, far more than anything else, is just the cheapest rate.”
So… should I stock up on plane tickets?
Probably not. Because, if the merger goes through, it will probably be a few years before you can board a BlueSpirit plane (working title). And Keyes thinks it’s possible that JetBlue, with the right priorities, will be able to expand operations and keep prices low.
Psst…if you’re looking to save on airfare, open a travel credit card can help you start earning miles.
The best result of a JetBlue-Spirit merger for travelers would be better amenities on still affordable flights. But if the new Spirit drops those ultra-low fares, other airlines will likely raise their prices as well.
#JetBlue #Spirit #Airlines #merger #travel #budget