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As prices rise across the globe, many Americans are looking to save money where they can, including travel. Yet the most recent slate of earnings reports from major US airlines indicates consumers aren’t necessarily opting for budget airlines amid an inflation economy. During Q3 2023, low-cost airlines saw sluggish sales – while their legacy counterparts watched revenues spike.
Frontier Airlines, one of the larger low-cost carriers, lost $32m (£26m) during Q3. Spirit Airlines, likewise, lost $157.6m (£197m). Southwest Airlines, which is considered a hybrid low-cost-full-service carrier in the industry, tallied a net income of $240m (£193m), which was a drop of roughly 30% from last year.
It’s not that people aren’t investing in travel – quite the opposite. In May 2023, spending on flying and related travel expenses was up, as pandemic-related restrictions on international travel continue to ease, and international destinations that have been off-limits for years become especially appealing.
The big three legacy airlines – Delta, United and American – have reaped the benefits of this wanderlust. Each posted huge profits in Q3. American’s net income was $263m (£212m); both United and Delta saw net income grow to $1.1bn (£890m). In Delta’s case, that was an increase of nearly 30% year-over-year.
The lacklustre figures from low-cost carriers appear to be the result of a series of coalescing factors, says Helane Becker, a senior analyst at TD Cowen, who specializes in airlines, aircraft leasing and air freight. Many experts aren’t terribly surprised by the numbers.
‘Revenge travel’
As pandemic-era travel restrictions lifted, US consumers’ desire to travel overseas spiked. So-called “revenge travel” meant many swapped domestic trips for long-hauls. This meant flying internationally on major airlines, something most budget airlines don’t do.
source:bbc
