Frontier Group Holdings recently announced its intent to buy Spirit Airlines, merging together in a $2.9 billion deal. This deal would also create the fifth-largest airline in the United States, as well as tighten competition against the other major airline companies in the U.S. Frontier and Spirit are known to be ultra low-cost carriers, even a step below Southwest Airlines which began the first low-cost concept.
This deal is also notable because it comes during a time of some unease for many airline companies. Since the pandemic began in the United States in 2020, airlines in the country have struggled to bounce back and conduct business as done before the pandemic began. While the end of 2021 saw a huge surge in Americans traveling, especially for the holidays, rates still didn’t reach pre-pandemic numbers.
Plus, the pandemic is still hampering business for many United States airlines. The ongoing pandemic has resulted in bookings slowing down every now and then when a new variant arrives and starts to spread, such as when Delta first began to cause cases to spread. Meanwhile, the Omicron variant, which is more contagious but less deadly, spread throughout many flight crews for different companies, resulting in many flight delays and cancellations around the holiday season.
Many of the bigger airlines, such as Delta and American Airlines, struggled greatly during this time because they had quite a lot of flights and routes. However, not every airline struggled. Southwest, for example, still did quite well in their fourth quarter whereas other major airlines didn’t.
Now, airline companies are warning analysts that the first few months of 2022 will likely be slow in business. However, this is not too unexpected, and many businesses (in many industries) will likely slow down in business until spring and summer hit. Analysts and airline officials do expect 2022 to be a great year for travel, though. Many major airlines have already projected profitability in 2022 as a result of reopening economies, fewer regulations because of the pandemic, and even higher vaccination rates.
As many airlines work towards recovery, this new merging could help Frontier and Spirit Airlines compete against the other major airlines — namely American Airlines, Delta Air Lines, United Airlines, and Southwest Airlines.
This new deal led by Frontier will also add about 10,000 jobs by 2026, according to company officials. The new merging will also offer more than 1,000 flights daily to more than 145 different destinations. This new business also expects to deliver about $1 billion in consumer savings, annually.
As Frontier and Spirit Airlines merge, this new low-cost business will likely enhance competition with the other major airlines. As it does tighten competition, this new business may also become the go-to low-cost option for many Americans traveling around the country.
As 2022 progresses, analysts will be closely watching this new merging, as well as anticipating how the rest of the airlines will function, especially if new waves of the pandemic again make things rather difficult. These airline companies are a big part of the economy, so analysts and economists must forecast exactly how things may play out.