From legroom to fare: How JetBlue’s acquisition of Spirit could transform air travel – CNBC | Gmx Pharm

Passengers wait at the Spirit Airlines check-in counter at Orlando International Airport.

Paul Hennessy | flare | Getty Images

Spirit Airlines caved in this week, agreeing to sell itself to JetBlue Airways for $3.8 billion, hours after a merger deal with Frontier Airlines was canceled that failed to garner enough shareholder support.

The new deal would mean big changes for travelers as it clears regulatory hurdles.

JetBlue has earned a solid reputation for passenger comforts like relatively generous legroom, seatback screens, live TV, free Wi-Fi, and free snacks like Cheez-Its and Stellar vegan buttery pretzel braids. It also offers business class with lie-flat seats.

In contrast, Spirit has become a punchline for its bare-bones service. The cabins on the bright yellow planes are more cramped, and passengers have to pay extra for “optional services” like carry-on baggage and seat selection.

“It’s historic. This is the first time anyone has wanted Spirit Airlines,” The Late Show host Stephen Colbert quipped about the deal on Thursday.

Still, Spirit has grown quickly and profitably by offering cheap tickets to holiday hotspots that sometimes cost less than a movie ticket or a few burgers. However, the airline’s “Big Front Seat” offers 36 inches of legroom for an additional cost of up to $250.

As the two disparate airlines move forward with their merger plans, passengers can expect:

What are JetBlue’s plans for Spirit?

JetBlue wants to get bigger, and Spirit has the planes and pilots to help it get there. The New York-based airline plans to retrofit Spirit’s aircraft JetBlue-style, ripping out the jam-packed seats for a more spacious layout with more amenities.

Combined, the airlines would become the country’s fifth-largest airline behind American, Delta, United and Southwest. Both have a strong presence in Florida and have expanded into Central and South America and the Caribbean in recent years. JetBlue flew to London last year.

The two airlines will continue to operate as separate airlines until the deal is completed, which is subject to regulatory approval. After that, passengers might be confused when flying on Spirit planes that haven’t been retrofitted yet.

JetBlue has some experience of such situations through its alliance with American in the Northeast, which allows airlines to sell seats on each other’s planes. Last year, JetBlue revamped its website to better highlight the differences in inflight features like business class seats or free Wi-Fi.

Despite the comedians’ digs, Spirit has improved its reliability in recent years — and it’s doing better than JetBlue in some ways.

JetBlue ranked last among 10 airlines for on-time arrivals this year through May, while Spirit ranked seventh according to the latest available data from the Department of Transportation.

According to flight tracker FlightAware, a third of JetBlue’s flights have been delayed and 4% have been canceled so far this year. For comparison, just over a quarter of Spirit flights were delayed and 2.7% were cancelled.

JetBlue CEO Robin Hayes says improving reliability is a priority. The airline has scaled back its growth plans, saying it doesn’t want to overwhelm its crews and other resources.

“A bigger JetBlue that’s delayed isn’t a better JetBlue,” said Henry Harteveldt, a former airline executive and founder of Atmosphere Research Group, a travel industry consultancy.

Is this the end of cheap tariffs?

The Biden administration has vowed to take a tough stance on both consolidation and inflation, so the disappearance of an ultra-low-cost airline could be a tough sell.

“Liquor may not be an elegant experience, but it’s cheap,” said William Kovacic, a professor at the George Washington School of Law and former chairman of the Federal Trade Commission. “If they disappear as an independent company… will that remove a source of downward pressure on the price?”

But JetBlue’s Hayes says the airline needs to grow fast and better compete with big carriers, which control more than three-quarters of the US market. Hayes argues that a larger JetBlue would mean relatively lower fares to more destinations.

Like some of the airline giants, JetBlue has already added certain low fares that mimic airlines like Spirit. These tickets also do not come with seat reservations or other perks that used to be standard on a bus fare.

But JetBlue’s business model of offering more convenience costs more than Spirit’s, meaning it probably won’t offer as many of its rock-bottom prices as Spirit.

Frontier Airlines, meanwhile, is already saying it’s happy to take a bigger share of the ultra-low-cost market after its Spirit deal fell through. Shortly after the airlines announced the end of their agreement, Frontier forecast 30% growth over the next year and launched a fare sale of 1 million seats at $19 apiece.

The airline will become the largest discount carrier in the US when Spirit is eventually acquired. Others are Allegiant and Sun Country.

“This gives us tremendous scope for growth,” said Barry Biffle, CEO of Frontier. “Therefore, this is a godsend for our employees and our shareholders.”

when does this happen

Not immediately. JetBlue and Spirit do not expect the deal to receive regulatory approval until late 2023 or early 2024, and then close in the first half of 2024.

Airline integration is a long and costly process. For example, flight attendants at United and Continental didn’t fly together until eight years after those airlines merged in 2010.

Retrofitting aircraft can also take years, and JetBlue might not start that process with Spirit’s fleet until at least 2025. However, the airline says it has recently fitted more than 100 of its Airbus aircraft with new interiors.

“We’ve had a lot of experience with how to do that lately,” Hayes said.

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