Bare-bones carrier Spirit rolls out a perk-filled tier to compete with premium airlines
.jpg)
The lap of (budget) luxury… Spirit Airlines, the US carrier known for cheap fares and spartan service, is trying to fly upmarket. The airline, which charges extra for bags, seat selection, and even water, is introducing a fare where those perks are included. Spirit’s “Go Big” package (its highest-priced tier) only gets you a roomier seat at the front. But starting next month the biz said the package would include free Wi-Fi, a checked bag and carry-on, and “unlimited” snacks and beverages (including booze). It’ll offer four fare options, ranging from Go Big (most perks included) to Go (you pay for water). It could all help Spirit compete with larger rivals like Delta Air Lines and United as it struggles to turn a profit.
Low spirits: Spirit recently warned of a bigger-than-expected quarterly loss after revenue from add-on fees came in a lot lower than anticipated.
Checked out: European budget rival Ryanair earlier this month said its quarterly profit plunged 46% despite a surge in travelers. It blamed lower fares.
Lots of empty middle seats… It’s not that travel demand is cooling. Quite the opposite: this summer’s expected to be historic for air travel, and the International Air Transport Association predicts the industry will earn nearly $1T in sales this year — a record. But while demand’s hot, fares are not: carriers are struggling with weak ticket prices in an oversupplied US market. Airfare prices are down 5% from a year ago, and Delta’s boss urged low-cost carriers to stop oversupplying seats.
Lower fares + higher costs are hitting airline profits. Delta posted disappointing earnings this month after its percentage of seats filled slipped last quarter.
More options = more profit potential… By expanding its tiers to four, Spirit could be better poised to compete with non-budget rivals, which offer everything from basic economy to first class (psst: the real profit-maker). Southwest Airlines is making a similar play, announcing this week that it’ll shift to assigned seating for the first time (allowing it to charge extra for seat selection). By expanding fare options, airlines hope to attract a wider variety of customers.