A perfect storm of economic headwinds appears to be engulfing budget airlines across the United States.
A slow economy and soft spending are causing a slump in travel demand among price-sensitive budget fliers¡ªthe main market for carriers such as Southwest, Frontier, and JetBlue, all of which reported net losses in the first quarter, according to Reuters.?
In addition to an economic slowdown, which is hitting price-sensitive travelers hardest, demand for premium airline products is surging. United Airlines, for one, saw premium cabin revenue rise more than nine percent in the first quarter of 2025.
Policy changes at Southwest, like assigned seating and the end of free checked bags, have also been unpopular. The Dallas-based airline¡¯s unconventional approach to flying had garnered it a cadre of loyal passengers, which helped it stay profitable in past economic downturns. With the changes, however, that¡¯s no longer a sure bet for Southwest, who reported a net loss of $149 million in the first quarter.
Mainline airlines, however, have been able to weather the storm thus far. In addition to the premium seats that fliers are clamoring for, mainline carriers have more international destinations, where travel demand from the United States is surging, airline executives said on United¡¯s first quarter earnings call. They also have more robust loyalty programs, with perks that lure in passengers and make them repeat customers.?
Low-cost carriers are doing what they can to compete over the summer travel season. Spirit Airlines, for one, is attempting to refocus on premium fliers as it emerges from a bankruptcy period. The airline has launched new fare bundles¡ªlike ¡°Go Big,¡± which includes a big front seat with extra legroom, priority boarding, and free snacks and drinks¡ªto attract more fliers from the premium sector.
Amid the sinking demand, budget airlines are cutting summer flights, too. Spirit Airlines has already trimmed 12,000 flights from its schedule in May and June, according to SimplyFlying, and Southwest announced similar cuts as well.
For the latest travel news, updates and deals, subscribe to the daily TravelPulse newsletter.
Topics From This Article to Explore
