Budget airlines are dropping notorious fees. What changed?

Budget airlines are dropping notorious fees. What changed?

Budget airlines have become infamous for setting low fares and charging passengers for everything from picking a seat to ordering a soft drink.

But two leaders of that model, Frontier and Spirit, have launched a different tactic: eliminating flight-change and cancellation fees for some or all customers. The change of heart is all rooted in business, industry experts say.

Both Spirit and Frontier are hurting financially and looking to better compete with major airlines, which have started offering their own stripped-down fares. Even as the budget airlines’ costs have increased, they are trying to win customers in non-leisure markets where bigger rivals are already established.

That means they can’t rely on their old model, said Mike Boyd, president of aviation consulting firm Boyd Group International, who called the airlines’ previous flight-change fees “usurious.” “They have to now provide something better,” Boyd said.

Passengers on Spirit will no longer have to pay a fee to change or cancel a flight; those charges previously ranged from $69 to $119, depending on when the change was made. There was no fee for flights changed or canceled 60 or more days in advance.

Frontier now is offering different fare categories with perks built in at higher price points, and only the barest-bones price will come with a change or cancellation fee. For people who purchase that basic fare, flight changes seven to 59 days in advance will carry a fee of $49, while that jumps to $99 within six days of a flight. Cancellation fees for the basic fare are $99.

Major airlines got rid of change fees during the early days of the pandemic, though their “basic economy” fares generally do not allow changes now. The budget airlines’ hope is to appeal to travelers who will pay more — not the “premium” customers who help keep larger airlines afloat, but the “less price-sensitive and more restriction-sensitive customers,” said Robert W. Mann, an airline industry analyst and consultant.

The changes at the two airlines went into effect Friday. Frontier included its news as part of a broader refresh it’s calling “The New Frontier,” which also includes the return of phone-based customer service, a year and a half after ending it; extensions for flight credits; and a promise of free miles if someone finds a lower price on their flight elsewhere.

“Today marks the beginning of a new era for Frontier — one with transparency in our prices, no change fees and the lowest total price,” Frontier CEO Barry Biffle said in a news release. “This is ‘The New Frontier’ and we are committed to offering more than the lowest fares — we deliver the best price for all the options you want and the customer support you need, when you need it.”

The airlines’ hope is to appeal to “less price-sensitive and more restriction-sensitive customers,” said Robert W. Mann, an airline industry analyst.

Spirit’s rollout of its new policy came with less pomp. The airline is promoting the end of the fees all over its website but did not make a formal announcement. When asked about the change, the carrier said in a statement that it has “many other enhancements in the works.”

“Spirit has been evaluating changes to our product and strategy that will help us better compete, elevate the guest experience and return to profitability,” the statement said.

The airlines will continue to charge for things like snacks and drinks that are free on larger rivals. Frontier is including many extra fees in its new bundles, though passengers who buy the cheapest fare would still need to pay extra for a carry-on or seat selection. Spirit will still charge for carry-on bags and picking a seat.

The changes come as the Biden administration has cracked down on what it calls “junk fees” charged by businesses, including airlines. A new Department of Transportation rule that was recently announced will force carriers to disclose certain fees up front, including those for changes and cancellations. Airlines are challenging that rule in court.

Boyd, the aviation consultant, wrote in a blog post this week that the recent changes at Frontier and Spirit were unrelated to such regulations.

Some industry watchers have questioned whether the changes will provide the business boost the airlines need. But they lauded the moves as good for customers.

“It’s exciting to see ultra low cost carriers try to create products that consumers may actually want to purchase,” Ben Schlappig, founder of the travel site One Mile at a Time, wrote in a post, “rather than just being the airlines that people reluctantly book when everything else is too expensive.”