A growth spurt by low-cost carriers is turning into good news for travelers this summer.
About 2.4 million people are expected to fly every day this summer aboard U.S. airlines, setting up the busiest air travel season on record.
Some travelers are spurred by eye-popping deals for flights. In many popular destinations around the country, fares are down as ultra low-cost carriers Spirit and Frontier expand around the country.
Hartsfield-Jackson International Airport is one of the battlegrounds. Frontier has boosted its schedule to 16 nonstop destinations from Atlanta, and Spirit will be at 15 after a raft of additions through September.
Those new flights will contribute to a 6 percent rise in the number of airline seats to Atlanta this summer versus last summer, according to the Airlines Reporting Corp., which processes tickets for travel agencies and online sites. Average summer fares to Atlanta are down 1.3 percent overall, and more on certain routes or flights.
Delta is still by far the dominant carrier in Atlanta, controlling the lion’s share of flights, with Southwest a solid No. 2 in the market. But Spirit and Frontier are “definitely putting pressure on the legacy carriers,” said George Hobica, founder of Airfarewatchdog.com. “The fares out of Atlanta would be much higher were it not for Spirit or Frontier.”
It’s a resurgence of competition after Southwest bought AirTran Airways and downscaled the latter’s Atlanta hub operation, reducing competition for Delta. Fares in some markets soared, compounding an overall industry trend toward higher fares in recent years.
Some of the biggest fare declines from Atlanta are on routes to leisure destinations including Fort Lauderdale, Miami, Orlando, New Orleans and Las Vegas, as well as other cities like Indianapolis and Minneapolis, according to data on leisure fares from Hopper, maker of an air travel app.
With Atlanta “dominated so much by Delta, as you bring in these other guys, they’re forced to compete and give back some of the profits that they were making from the drop in oil prices, for example,” said Patrick Surry, chief data scientist for the firm.
Nationally, AAA expects average Memorial Day air fares for the top 40 routes in the country to be down 2 percent this year to an average of $222 round trip.
Memorial Day surge
“Americans have more money in their pockets due to rising wages and lower gas prices,” AAA senior vice president Brent Stahlheber said in a written statement. That will generate the most travel over Memorial Day in a decade, with momentum carrying through the summer, he said.
The deals are spotty, though. In some key business markets, the nation’s largest carriers are taking advantage of strong demand to bolster profits, charging high fares where they can. That means prices on some routes are still on the rise.
For example, average summer fares from around the country to New York’s John F. Kennedy International Airport are up 9.3 percent, according to Airlines Reporting Corp. data.
“Demand remains strong and fares are beginning to stabilize,” said John Heimlich, chief economist at Airlines for America. But, he added, “there a lot of changes in the marketplace. We see a lot of capacity coming in.”
The industry has evolved into several segments. The big airlines have consolidated — Delta-Northwest, Southwest-AirTran, United-Continental, American-US Airways — to reduce the number of mega-carriers to four.
Delta, United and American are focusing on corporate travelers and international markets. Southwest is morphing into a different variety of mega-carrier, with all-coach seats, no seat assignments and expansion into the Caribbean, Mexico and Central America.
Miramar, Fla.-based Spirit and Denver-based Frontier use an “ultra low-cost carrier” model that attracts travelers with surprisingly low fares, but charges extra for carry-on bags and in-flight soft drinks.
“Low fares are great because they’re a better marketing tool than anything airlines have invented otherwise,” said Daniel Shurz, a Frontier senior vice president.
New nonstops
Frontier has added nonstops between Atlanta and New York LaGuardia, New Orleans, Los Angeles, Las Vegas, Minneapolis and Cincinnati.
Spirit in May added routes from Atlanta to Cleveland, Las Vegas and Orlando, and is adding routes to Baltimore, Philadelphia and Tampa in June, nearly doubling its flying this summer compared with last summer. It plans to add flights to Los Angeles in August and to Boston and Fort Myers in September.
In some markets like Cleveland, Orlando and Las Vegas, four carriers will compete for customers, including Delta, Southwest, Frontier and Spirit, according to an analysis by the Centre for Aviation. In others, there will be even more competition, such as on routes from Atlanta to Philadelphia, Chicago O’Hare and Los Angeles, the analysis said.
To compete with ultra low-cost carriers, Delta added a “basic economy” fare level that does not allow any flight changes or advance seat assignments, which it now has in several hundred markets.
Meanwhile, Southwest offered a companion pass promotion targeted at Atlanta, which the airline said attracted thousands of customers, including travelers new to Southwest.
Hobica said Delta or Southwest may match fares on Spirit and Frontier, or compete with slightly higher fares to account for competitors’ carry-on baggage fees.
“There are people who will not fly these ultra-low-cost carriers at any price….. [But] not everyone’s rich and actually not everyone brings a bag,” Hobica said. With Spirit and Frontier targeting budget travelers, “They’re carving a niche for themselves.”
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