Frontier fares jump as fuel costs and Spirit's exit lift prices

Frontier Airlines has said passengers paid about 71% more in base fares between July and September than a year earlier, according to The Points Guy. The figure comes from a quarterly filing, and the airline discussed it on its earnings call on Wednesday. Budget travellers in the US are the most exposed, as higher jet fuel costs and the loss of Spirit have both pushed prices up.

Three causes, according to Frontier's CEO

Chief executive James Dempsey told analysts the revenue surge was split roughly equally between three factors. In The Points Guy's account, he described it as "about a third better revenue management," about a third Spirit and about a third fuel. The airline introduced more sophisticated pricing earlier this year.

Spirit went out of business in May. Before that, the two carriers overlapped on about 30% of routes, Frontier later estimated, and Frontier has since added several routes Spirit used to fly, with more expected. The Points Guy notes it is still unclear how much Spirit's disappearance has affected fares themselves, because prices rose across the whole industry as fuel costs climbed.

Record revenue, but a loss

Frontier reported record third-quarter revenue of $1.355 billion, up 53%, according to Live and Let's Fly. Capacity rose 18% and revenue per available seat mile rose 30%. The load factor was 79%. The Points Guy says planes were only slightly less full than a year ago, suggesting passengers kept paying the higher prices.

The airline still posted a $104 million net loss. Live and Let's Fly says this was mainly down to $134 million in charges linked to returning 13 Airbus A320neos early. Excluding special items, Frontier made an adjusted profit of $40 million, against an adjusted loss of $77 million a year earlier.

Fuel remains a heavy cost. Frontier spent $425 million on fuel in the quarter, against $234 million a year earlier, at an average of $3.96 per gallon. For the fourth quarter, it forecasts anything from an adjusted loss of $0.15 per share to a profit of $0.05, assuming fuel of about $4.75 per gallon.

Industry-wide price rises

Frontier is not alone. The Points Guy reports that industry ticket prices in September were up roughly 22% on last year, and that Cirium data show Thanksgiving fares about 30% higher. Delta Air Lines chief executive Ed Bastian said fuel prices will recede, but that the test is whether the industry can "sustain the revenue that we have created." American Airlines said it is actively prioritising higher fares over filling every seat.

Premium upgrades coming

Frontier says it will start installing new first-class seats "imminently", with sales likely for flights departing by early spring. It also plans to install Starlink Wi-Fi from early next year. United, Alaska, Southwest and American have pledged free Starlink access for loyalty members. Whether Frontier will charge for it is unknown.

What this means for travellers

• Expect higher fares on Frontier and across the industry, including for the Thanksgiving period, where Cirium data show a rise of about 30%.
• Cheaper fares may not return quickly. Airline executives have suggested they want to hold on to higher revenue even if fuel prices fall.
• Frontier has added some former Spirit routes and expects to add more, so options on those routes may widen, although the sources do not give fare figures for them.
• Frontier's new first-class seats should be bookable for flights from early spring, and elite Frontier Miles members will be eligible for upgrades. Wi-Fi pricing is yet to be announced.

The sources do not say how far fares on former Spirit routes specifically have risen.

Sources: The Points Guy; Live and Let's Fly.