Is the ULCC Dead? Scott Kirby is Half Right.

For years, the conventional wisdom in U.S. aviation has been simple: ultra-low-cost carriers win because they operate more efficient aircraft. Newer planes burn less fuel, carry more passengers, and drive down costs. But a closer look at the Department of Transportation's fuel-efficiency data (T2) suggests something more interesting—and more consequential—is happening. The real story isn’t about aircraft. It’s about execution. Take Frontier Airlines. On paper, its fleet is not radically different from competitors. It operates the same family of Airbus narrowbodies—primarily the Airbus A321neo and Airbus A320neo—that are widely used. These aircraft are efficient, but not uniquely so. In fact, aircraft-level data shows the A321neo delivering around 100–101 ASM/gallon, roughly in line with the best narrowbody jets flying today. And yet Frontier’s system-wide efficiency tells a very different story. In 2025, Frontier generated ~106 ASM/gallon—not just ahead of competitors, but ahead of what its own aircraft averages would suggest is possible. That’s the critical detail. Airlines typically fall short of their aircraft’s theoretical efficiency due to real-world frictions: empty seats, suboptimal routes, ground time, and operational complexity. Frontier, by contrast, appears to be doing the opposite. It is extracting more output per gallon than the baseline performance of its fleet. That is extremely unusual. Compare this with Allegiant Air. Allegiant has begun introducing one of the most efficient aircraft in the market, the Boeing 737 MAX 8-200. In a high-density configuration, that aircraft is achieving ~104 ASM/gallon—essentially matching Frontier’s fleet at the hardware level. But Allegiant’s system-wide performance remains stuck around the low 80s. That gap—roughly 20 ASM/gallon—is enormous. It cannot be explained by technology. Instead, it reflects differences in how the aircraft are used. Allegiant’s fleet mix includes lots of older, less efficient planes. Its leisure-focused network leads to lower daily utilization. Flights are less frequent, more seasonal, and often tied to smaller markets. All of this reduces the amount of productive flying each gallon of fuel generates. In other words, Allegiant has access to similar tools—but is not using them in the same way. This distinction between aircraft efficiency and airline efficiency is where the competitive landscape is shifting. For years, Frontier’s advantage was often attributed to its fleet. But the data suggests something deeper: its advantage lies in how tightly its entire operation is optimized around fuel productivity. That includes high seat density, aggressive aircraft utilization, disciplined route planning, and consistently strong load factors. Each of these factors may seem incremental on its own. Together, they compound into a structural advantage that is clearly evident in ASM/gallon. It also explains why other airlines, including Southwest Airlines, lag despite operating an increasingly modern fleet. Even as Southwest incorporates more fuel-efficient Boeing 737 MAX 8s, its business model—featuring lower seating density and more operational flexibility—limits how close it can get to Frontier’s numbers. The implication is both simple and underappreciated. The technological gap in aviation is narrowing. Aircraft like the A321neo and the 737 MAX 8-200 are at a common efficiency ceiling. But as that happens, the source of competitive advantage shifts from hardware to execution. Frontier is already operating near that ceiling—and, remarkably, appears to be squeezing out even more. For competitors, the path forward is clear but difficult. Matching Frontier will not come from buying better aircraft. It will require rethinking how those planes are deployed: how often they fly, how full they are, and how efficiently networks are designed around them. Until then, Frontier’s edge remains intact—not because it has better aircraft, but because it uses them better than anyone else. Is the ULCC model finished? United's Scott Kirby has been the most vocal about this, and he’s argument isn’t really about cost structure. It’s about customer behavior. He’s been blunt: The ULCC model was built to “trick people… then charge fees” It fails because it doesn’t create repeat customers or loyalty He’s gone further, saying the model is “not viable” after failures like Spirit Airlines Translation: Mr. Kirby thinks the commercial strategy is broken—not necessarily the cost base. Here's where he's right - the weakest ULCCs are broken Spirit’s repeated financial distress and restructuring Heavy reliance on ultra-low fares + fees Poor customer perception That version of the ULCC model—“lowest fare + heavy fees + weak loyalty” (bottom fishing) is indeed under real pressure and broken. And Mr. Kirby’s most interesting point: ULCCs worked when they were small—but struggle at scale. Why? Because you need repeat customers to fill planes, and the model doesn’t build loyalty. That’s a real structural tension. But, guess what? The ULCC efficiency is very alive. Frontier Airlines: ~106 ASM/gallon vs Industry average: ~80–82. [caption id="attachment_192076" align="aligncenter" width="640"] US DOT T2; AirInsight[/caption] That’s a massive, persistent cost advantage, and no legacy airline comes close. Bifurcation not Broken Instead of “dead,” what’s happening is a bifurcation. The early version is indeed dying. That model was driven by ultra-low fares, fee-heavy, opaque pricing that generated weak loyalty and poor reliability. Spirit Airlines is the poster child. Now comes version 2, the evolving ULCC. Still ultra-low-cost, but with better pricing discipline, a cleaner product, and a smarter network. Crucially, it comes with strong execution. Frontier Airlines is the poster child. Mr. Kirby is right about “Bad ULCCs are dying,” but wrong about “ULCC economics are dead”. The DoT's data show that the ability to convert fuel into seat miles still exists—and is unmatched. The winners won’t be the airlines with the cheapest fares. They’ll be the ones that extract the most ASMs per gallon and convert them into sustainable margins.

No results