Is Consolidation On The Horizon For Budget Airlines?

In recent years, the airline industry has undergone a rather stark transformation through a series of mega-mergers between legacy carriers. Still, one group has been left relatively untouched: budget carriers. But the Chairman of the Board for Frontier Airlines sees a future with fewer bottom-dollar airline brands.

Bill Franke is managing partner for investment firm Indigo Partners and until 2013 served as Chairman for discount carrier Spirit Airlines. He was previously the Chairman at America West Airlines.

Reuters reports that, during a speech yesterday at the Airline Economics conference in Dublin, Franke pondered not if the budget airlines will follow the merger-happy lead of the bigger carriers, but when this consolidation will occur.

“Don’t we all wonder just how long it will take before the three to five lower-cost airlines in the States will consolidate?” he said.

As lower-cost airlines like JetBlue and Southwest make changes to compete for those passengers willing to pay more to fly on a legacy carrier like American or Delta, Franke believes there is an underserved market of travelers who only want an ultra-cheap ticket.

And because of that, he says Frontier is moving toward the lean, no-frills carrier model already employed by Spirit Airlines.

“From where we stand, the future rests with low-cost short-haul carriers or a measured product with a lower fare for the longer haul,” he says.

Indigo’s Franke sees U.S. budget airline consolidation [Reuters]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.