A key goal for any merger is synergies.  Let there be no doubt that one synergy being targeted is people savings.  What do we know about these two airlines and their labor forces? 

As the following chart shows, both airlines have significant labor efficiencies. The latest metrics we have are Frontier at 7 and Spirit at 5 employees per flight, respectively.  For context, ULCCs are at 5, LCCs are at 16, and Network airlines are at 46.  The low numbers do not mean there are no “people savings” to be found.

If we compare employees to traffic for the combined Frontier and Spirit airlines we get the following.  The combination ULCC is an effective people mover with industry-leading labor ratios.  As the traffic curve shows, the combined airline has seen an envious V-shaped traffic recovery. Focusing on leisure traffic was the right recipe for post-Covid air travel.

If we look at the top 80% of costs in per flight terms, we get the following for the LCCs.

The equivalent chart for ULCCs is as follows:

The pattern is quite different. And when we only list the chart with Frontier and Spirit combined we get the following.

This leads us to conclude the combined airline will focus on driving down flight ops costs, specifically fuel burn which accounts for between 40% and 50% of costs.  The focus on fuel burn in the announcement is apropos. 

Finally here are breakdowns for Frontier and Spirit

Frontier has a lower cost structure.  Where do you think those synergies will first be found?

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Addison Schonland
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Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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