In a post earlier today, I laid out the factual reasons why the JetBlue acquisition is better than the Frontier-Spirit merger. Here are a few reasons off the cuff.
Just Because They Are Both ULCCs Doesn’t Make Them a Good Fit
I get it, JetBlue is the cool airline (they really are) and Spirit is the discount carrier with the bad rap. Fine. I’ll concede that point only because I am out of breath trying to explain what Spirit really is to a bunch of people who have never, will never fly the carrier but somehow justify the validity of their opinion anyway.
Not all ULCCs are created equal just like not every major carrier in the US is the same or fits well together solely because they are in the same category. For example, let’s take American and United Airlines. They are both big international flag carriers. They have unwieldy fleets that touch every category outside of jumbos. Should they get together and form “America United”, right? No. The overlap out of Chicago and Washington DC alone would be ridiculous. Should regulators be okay with essentially all of Texas belonging to the behemoths? Certainly not. They don’t belong to the same alliance, they don’t even use the same ticketing system or common technology.
Likewise, I haven’t seen a single justification for the merger outside of the two of them being in the same price category. While important, it wouldn’t vacate the market altogether. Allegiant and Frontier would remain if JetBlue bought Spirit, they would compete, and that’s not to say that the majors don’t have a Basic Economy product that serves them.
However, Frontier simply doesn’t run the same models. They fly odd schedules on leisure-heavy markets, some of them seasonally. Spirit flies most of its schedule at least daily, into big airports, and helps business travelers save money too. Take the New York market for example from Pittsburgh. Spirit’s June launch of its Newark service, I expect, will drop fares and make it far easier and cheaper to get to the Big Apple. For every two flights on United, one flight will do on Spirit due to the aircraft type used.
Frontier will never start Pittsburgh-New York (market) daily flights. They just wouldn’t and that’s one of the main reasons I would rather have a bigger JetBlue, than a combined Frontier-Spirit.
A “Merger of Equals” Is Fiction
A merger of equals… somewhere legacy American Airlines staff is chuckling right along with me. I have been apart of a merger (outside of the business) that was branded the same. Both companies were in the same market, had similar employee counts, similar revenue but it was only a matter of time before all of the company leadership on the smaller side of a similar 7-5 board split had gone on to other ventures. Before long, accounting, HR practices and policies, finance, and then ultimately leadership tipped to the side of the “equal” that had more board seats. I’m not bitter, it’s just business.
That said, US Airways leadership gutted American Airlines just when it was going for great. The carrier was installing premium interiors like IFE in all of the headrests, while legacy US Airways didn’t even offer outlets at the seats. Over time, the frog was boiled and now the carcass of what American Airlines once was is all that remains.
A merger of equals is a business fallacy so if you consider this lens, then who should Spirit become acquired by, Frontier or JetBlue? I’d rather more JetBlue than a bigger Frontier.
Frontier’s Focused On Costs, Spirit Is Focused On The Traveler
Frontier just announced that in its push to increase its presence at Denver International Airport, they will invest $100 million in a terminal renovation to secure its own section with… wait for it… tarmac entry and exit from the plane. Frontier makes the point that this is common in Europe – it is, and frankly, it’s common in the Caribbean, and Asia too. But in most of those places, they aren’t literally in the mountains fighting blizzards. There are exceptions, Zurich, and Geneva come to mind and Frankfurt can get pretty cold too, but that’s a different customer base as well.
If Frontier said they wanted to do Tarmac loads in Florida – cool, no problem, save that money and pass it on to the customer. Connecting in Denver in February on the tarmac? No thanks. That’s a cost-cutting measure to stay more competitive on fares, one that Spirit hasn’t put forward despite so much of their operation being in sunny Florida.
That’s a great image of how Spirit is different. So is Wi-Fi. Spirit is finishing up its fleetwide installation of (fast) connectivity which even allows you to use your own streaming services. That sounds a lot more like JetBlue than Frontier who don’t offer it at all. Spirit’s loyalty program is better – if purely looking at domestic travel it rivals and even surpasses some network carriers. Spirit gives away free points on every flight (to engage customers with their credit card offer), Frontier doesn’t. Spirit offers its Big Front Seat (larger than first class on most legacy carriers) and makes it attainable (about $50/flight), Frontier doesn’t have a Big Front Seat.
Spirit has made its focus “Invest in the guest” and that’s not Frontier’s approach. Whataburger and In-N-Out are both regional favorite fast food burger chains. There are advantages to both, but a merger would be oil and water. It doesn’t matter that they have the same price point, serving a similar product, in the south and western states – they aren’t similar enough to work together. One will overtake the other and instead of having an amalgamation, you would have simply more Whataburgers or In-N-Out.
I’m an In-N-Out guy, not Whataburger, there is no middle ground.
Simply out of sheer laziness, many who think this is a good idea haven’t really examined the culture or customer experience. Analysts looking at route maps, and statistics haven’t flown either carrier, let alone both. I do not believe a blended board (unless 50/50) can ever be a merger of equals. Therefore, if I accept that Spirit is no more, do I want more Frontier or more JetBlue? The choice is clear.
What do you think? Have you flown all three carriers? How do you think this should play out? Do you agree that it will not be a merger of equals?