United Airlines CEO Scott Kirby said struggling low-cost carriers such as Spirit Airlines and Frontier Airlines are on the path to “going out of business” because of poor customer service.
Kirby, an outspoken commentator, blamed airlines for a “flawed business model” that lures passengers with ultra-low fares and then charges for oversized carry-on bags that can sometimes cost more than the cost of a plane ticket.
He pointed Frontier Airlines reportedly plans to offer bonuses to gate agents It will flag carry-on bags as oversized and charge passengers an extra $99 fee.
“You can do it once, but not twice,” Kirby said. He spoke on the air show podcast. It was first reported on Monday Business Insider.
“And these airlines have grown so big that they actually need repeat customers.”
Customers ranked Frontier Airlines and Spirit Airlines last and second-to-last, respectively, among 11 North American airlines, according to a 2024 J.D. Power survey.
“They’re not treating their customers right,” Kirby said.
Kirby said Frontier CEO Barry Biffle’s recent comments that “lowest cost always wins” were “completely wrong.”
“Best service always wins,” Kirby said.
The U.S. Department of Transportation announced that Spirit Airlines and Frontier Airlines had the highest customer complaint rates among domestic airlines in 2023.
Asked what he thought about the future of ultra-low-cost airlines, Kirby replied: “I think they’re going out of business.”
The Post has reached out to Spirit and Frontier Airlines for comment.
Despite Spirit and Frontier’s shaky balance sheets, Kirby credited the two airlines for shaking up the industry.
Passengers “want the lowest prices, they want disaggregated pricing,” Kirby said.
“So we had to create a basic economy cup.”
United’s cheap flights, like those of its rivals, don’t include carry-on baggage fees, and passengers who buy cheap tickets aren’t allowed to change or cancel their tickets.
Spirit Airlines recently eliminated all change and cancellation fees, and Frontier Airlines eliminated all fees except for basic economy fares.
Spirit Airlines CEO Ted Christie said earlier this year that the US airline industry is a “rigged game” designed to benefit the “Big Four” — United, Delta, American and Southwest — and that the “long-term loser” is American passengers.
“Virtually all of the profits in the entire U.S. airline industry are now concentrated in the hands of just two companies, while smaller, non-traditional airlines are scrambling to restore profits in a climate where fraud appears more prevalent than ever before,” Christie said on an earnings call with analysts.
Denver-based ultra-low-cost carrier Frontier Airlines has failed to report a profit in three of the past four quarters despite a travel boom.
Frontier’s struggles, along with those of other low-cost carriers such as Spirit Airlines, have raised questions about the company’s business model from some analysts.
Frontier shares have fallen 32% since early March and are down 47% over the last year.
Biffle blamed the decline in airfares on industry overcapacity in major leisure markets.
Frontier Airlines’ fare revenue per passenger in 2023 is down 22% from the previous year.
Spirit Airlines expects to post a loss in the second quarter as revenue remains weak due to the grounding of many aircraft and industry overcapacity in key markets.
Spirit Airlines shares have fallen more than 75% since Jan. 1. Earlier this year, a federal judge blocked the company’s $3.8 billion merger with JetBlue Airways.
Spirit Airlines’ failure to turn a profit at a time when travel demand is growing has raised questions about its ability to manage debt coming due in 2025 and 2026.
The company said it was in “constructive” discussions with bondholders and aimed to reach a resolution this summer.
Like Frontier, Spirit Airlines’ revenue has been hit by overcapacity in key markets, forcing the airline to offer steep discounts to fill planes.
The average fare per passenger in the first quarter fell 16 percent from the same period last year.
With post wire
