The acquisition of Spirit Airlines by Frontier Airlines will produce a combined large ULCC (Ultra Low-Cost Carrier) that will likely be disruptive to competitive dynamics in the industry. Combined, they will become the largest North American operator of the A320neo family when the orders are delivered, providing them with an extremely fuel-efficient fleet. Each carrier holds large orders with Airbus pre-merger and plans for those orders remain in place.  The new carrier will continue to retire older A319 and A320 models as they take delivery of neo models to replace their fleet with more efficient aircraft.

In the announcement of the merger, the airlines indicated plans to achieve 105 seat miles per gallon by 2025. We decided to use one of our Decision Analytics models (accessible to AirInsight subscribers) to examine how feasible that will be.

In developing our model, we utilized two different Department of Transportation databases, ensuring that the time periods are the same, and combining them for analytical purposes. The T2 and T100 datasets have provided us with the data required to develop a number of metrics for US carriers. This includes seat miles per gallon.

What is the average for seat miles per gallon today?

The following model shows aircraft miles per gallon by airline, shown against average stage length, from 2010 through 2021. The model plays through history by pushing the play button at the lower left-hand corner.


The second chart shows seat miles per gallon, computed based on the number of seats flown by each carrier by aircraft type. That chart is interesting, as it shows that today, the bulk of the airlines fall at about 90 seat miles per gallon in 2021, including Spirit and Frontier who averaged 94 and 101 respectively in 2021. Getting to 105 means an  11% increase in fuel economy per seat for Spirit and a small 4% increase for Frontier. Neither is a tall order in four years, particularly with new aircraft models being 16% more fuel-efficient than their predecessors.

Is Frontier’s goal of 105 seat miles per gallon feasible?

Let’s take a look at some additional data to determine whether the combined large ULCC can deliver on that goal. When we examine the fuel economy of newer aircraft, the results are much better than for older models. The chart on page 1 of the above data model shows both flight miles per gallon and seat miles per gallon by airline.

As one might expect, Spirit and Frontier are at the top of the leaderboard in seat miles per gallon, as shown in the bottom chart on page 1 of the data model.  They won’t have far to go to reach the goal of 105 seat miles per gallon by 2025.  Spirit, which still operates some older A319 aircraft that will soon be replaced by neo models, should also be in a position to easily reach that goal.

The interesting point here is that the average of the more recent models is about 85 seat miles per gallon, but a few re-engined types are exceeding 100 seat miles per gallon, particularly the A321neo. The A320neo and the 737 MAX9 averaged 101 and 99 seat-miles per gallon in 2021, so the 105 number does indeed appear quite feasible, particularly as the A321neo is added to the combined fleet.

With the addition of the A321neo, joining the already fuel-efficient A320neo, the goal of 105 seat miles per gallon by 2025 appears to be something that the new Frontier could not only meet, but exceed. Frontier recently added 91 A321neo to its order for 143 A320neo family aircraft to be delivered between 2022 and 2028. Spirit also placed an order with Airbus for 25 A319neo, 70 A320neo, and 30 A321neo, with an additional 10 A321neo committed through a lessor. The combined ULCC will be the largest North American operator of the fuel-efficient A320neo family.  Indigo Partners favors Pratt & Whitney engines and since both carriers chose that engine, standardizing will likely result in maintenance cost synergies post-merger.

The strong commitment to new technology aircraft should maintain the combined ULCC’s position of low-cost leadership in the North American marketplace and meet their environmental goals – improving from ~75 seat miles per gallon today to a goal of 105 by 2025. That represents an increase in fuel efficiency of a combined 7% on a per-seat basis over the next four years, as older planes are replaced by both more fuel-efficient and larger models. That reduction in fuel and maintenance costs from the new aircraft should offset their capital cost differential and enable the combined ULCC to be disruptive in key markets.

Combined with the increasing use of Sustainable Aviation Fuel, SAF, carbon footprint improvements will be dramatic for the combined ULCC. Their goals, while ambitious, appear feasible given their large order book and massive fleet replacement plans.

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Ernest Arvai
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President AirInsight Group LLC

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