By DAVID CASEY
Much can change in a year as the Americas ultra-low-cost sector proves. When the route development industry convened in San Antonio for the last Routes Americas, Frontier Airlines and Spirit Airlines were pushing ahead with a merger, Colombia’s Viva Air was yet to surface as a takeover target, and the number of Canadian ULCCs operating commercial flights was half the size compared to now.
David Casey | Editor-in-Chiefdavid.casey@informa.com
The shifting landscape in the region highlights a state of flux in the market at the present time. In the US, the main uncertainty surrounds JetBlue Airways’ proposed $3.8 billion purchase of Spirit after the Justice Department (DOJ) this month sued to block the acquisition, saying the move would eliminate “about half” of all ULCC seats in the industry.
JetBlue has declared that it is three times more effective than Spirit at bringing down competitor fares, but the DOJ has countered by saying that fares drop 17% when Spirit enters a market and rise by 30% when it leaves. According to department, the acquisition would have anticompetitive effects on more than 150 routes, with harm “most directly felt” on at least 40. In essence, passengers win when JetBlue and Spirit compete.
Somewhat perversely, the DOJ’s antitrust division has also been able to use Spirit’s own arguments against the deal from back when the bid was hostile, highlighting that about three-quarters of JetBlue’s capacity is tied up in the Northeast Alliance with American Airlines—meaning that JetBlue no longer competes with American Airlines on those flights and, if the deal happens, neither will Spirit.
While Frontier and newer entrants Avelo Airlines and Breeze Airways will be watching the lawsuit with interest—no doubt hoping to fill the gaps on routes across the US should Spirit exit the ULCC space—there is a similar state of instability among LCCs in parts of Latin America.
The most notable example is in Colombia with Viva Air, which suspended operations in late February after 11 years of activity, citing continued delays in gaining government approval for its acquisition by Star Alliance member Avianca.
However, where there is crisis, there is opportunity. Chile’s JetSMART, the Indigo Partners-backed ULCC, is starting the certification process for an airline in Colombia. The new unit, JetSMART Colombia, plans to operate 27 routes across the country from a base in Bogota.
Elsewhere, competition in the ULCC market continues to strengthen in Canada following the launch of Lynx Air in April 2022, followed by Canada Jetlines in September. After initially starting with domestic service, both have now entered the US transborder market, intensifying the battle with Swoop and Flair Airlines.
The ongoing transformation of the market across the Americas demonstrates its dynamic nature as airlines in this space continue to disrupt the status quo. For airports and destinations, that will present further opportunities, making the conversations here in Chicago all the more important.
