These days, even flying on a budget airline won’t save you from airfare sticker shock.
Frontier Airlines just revealed how much its ticket prices have surged in recent months.
Between July and September, Frontier passengers paid about 71% more in base fares than they did a year prior, according to a quarterly filing.
That came as the global airline sector continued to battle sky-high jet fuel costs — expenses that airlines have aggressively passed on to customers over the past seven months.
“We are participating in that, clearly,” Frontier CEO James Dempsey said, speaking Wednesday on the company’s earnings call.
But Frontier executives also acknowledged oil prices aren’t the only reason the airline is collecting more money from passengers.
Frontier gets lift from Spirit’s absence
Dempsey estimated the surge in revenue the airline reported Wednesday was equally due to this spring’s collapse of top rival Spirit — and more sophisticated pricing strategies the airline rolled out earlier this year.
“I would say it’s about a third better revenue management,” Dempsey told analysts. “Maybe about a third Spirit, and about a third fuel.”
After Spirit went out of business in May, industry analysts had feared that reduced competition among low-cost airlines could lead to higher prices for consumers — especially when it came to the cheapest economy fares that budget carriers have historically competed on.
But in recent months, it had been difficult to say for sure how significantly Spirit’s absence had influenced industry pricing; after all, fares had surged across the entire airline sector as carriers battled the highest jet fuel cost in years.
It’s still not clear how much Spirit’s disappearance has affected fares themselves. However, Frontier has certainly benefitted from the loss of its former top rival.
Prior to Spirit’s collapse, the two carriers — which once talked about merging — had overlapped on about 30% of routes, Frontier later estimated.
Frontier has subsequently added a host of other routes Spirit previously flew, and said more are likely coming.
Higher prices across the airline sector
Frontier is certainly not alone in raising fares.
Industrywide, ticket prices in September were up roughly 22% over last year.
Holiday travelers are feeling the pinch especially, with Thanksgiving fares surging about 30% over last year, according to data reported this week aviation analytics firm Cirium.
It’s not clear when — or if — air travel could get cheaper.
In recent months, airline executives have strongly suggested carriers will look to maintain higher fares even after oil prices fall.
“Fuel prices will recede,” Delta Air Lines CEO Ed Bastian said this month. “The test for us at Delta — and I think for the industry — is that we sustain the revenue that we have created.”
A big reason airlines have been able to charge higher prices? Passengers have shown a willingness to pay.
Despite the higher fares, Frontier’s planes in the third quarter were only slightly less full than last year.
American Airlines, meanwhile, said last week that it’s “actively prioritizing” higher fares over filling every seat.
Frontier reports financial loss, eyes first-class and Starlink
Despite reporting record passenger revenue during the third quarter, Frontier lost $104 million as the higher jet fuel costs ate into its bottom line.
The carrier has not turned a full-year profit since 2019, but said it’s optimistic about 2027 thanks to two major premium investments coming online in the next few months.
First-class installations begin ‘imminently’
The airline said it expects to start installing its new first-class seats “imminently.” Those will likely go on sale for flights departing by early spring.
Frontier Miles members who earn elite status will be eligible for upgrades to the new recliners seats.
TPG Exclusive: Frontier wants to be an airline you’d choose to fly. Will first class and new perks do the trick?
Starlink comes online in early 2027
Meanwhile, the carrier plans to start installing Starlink Wi-Fi on its aircraft early next year.
Until now, the discounter hasn’t offered any on-board internet.
“We’re going from nothing to a product that’s best in class,” chief commercial officer Bobby Schroeter said Wednesday.
One question still unanswered? Whether it will be free.
United Airlines, Alaska Airlines, Southwest Airlines and American have each begun rolling out Starlink to their planes — or plan to soon. Each have pledged to offer the service free to their loyalty members.
But as a budget carrier, Frontier has historically charged for the few “add-on” services it’s offered. Whether it will buck that trend with Wi-Fi remains to be seen.
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Source: thepointsguy.com
