Over the past several years, we’ve seen the ultra low cost carrier business model in the United States under immense stress. With costs going up and the legacy carriers better competing, they’ve found themselves in a really challenging situation. Obviously Spirit Airlines is in the worst position, but Frontier Airlines isn’t exactly doing great either. Along those lines, there’s an interesting development on that front.
However, that’s not exactly how things are playing out, as the airline is significantly shrinking its planned fleet of new generation aircraft. Specifically:
At the same time, the entire ultra low cost carrier business model is reliant on growth and scale to keep unit costs down. When an airline shrinks, unit costs typically go way up, in terms of economies of scale, and also in terms of labor costs (since the most junior employees, who are paid the least, typically get furloughed).
A great solo travel tip spotted this week on One Mile at a Time.
