The cheap seats may have gotten too cheap. Low-cost carriers like Spirit Airlines and Southwest Airlines , who were facing existential threats to their businesses started a race to the bottom for fares, have started trying to upgrade themselves in the eyes of consumers. The dilemma facing them was spelled out in a research note last month by the analyst Thomas Fitzgerald at TD Cowen.
“Low-cost and ultra-low-cost carriers in the U.S. enjoyed an impressive run of growth in the first two decades of the 21st century.
They disrupted full-service carrier business models, took significant share, changed consumer expectations, and hastened industry consolidation,” he wrote. “We believe that has changed. The empire has struck back.
” When historically not-cheap players and United Airlines have super-cheap budget options that are only getting cheaper, it becomes harder for its competitors to distinguish themselves with price alone. Southwest Airlines, which is trying to turn things around after a few years of uneven financial performance, is that wants to clean house in its C-suite and board of directors. One big change the airline is making is that it will let customers , a normalization measure flying in the face of decades of tradition.
Likewise, Spirit Airlines has been known for guaranteeing that a fare only bought a seat on its plane. Actually that seat, or , or even getting some mid-flight refreshments — parts of the flying experience that passengers with its competitor.