A Spirit Airlines aircraft performs operations in preparation for departure at Austin-Bergstrom International Airport in Austin, Texas, on February 12, 2024.
Brandon Bell | fake images
Spiritual airlines is eliminating change and cancellation fees, effective immediately, days after Frontier's similar announcement, part of a review of the long-standing strategy of the country's largest discounters.
Before the new rule, Spirit used to charge between $69 and $119 for ticket changes and cancellations, depending on how close to departure the customer made the change.
“This new policy is among the best in the industry because it applies to each and every guest,” Spirit said in a statement to CNBC. “We have many other improvements in the works and look forward to sharing more soon.”
The changes mark a shift in low-cost airlines' pricing approach, including low base fares to attract customers and additional fees for advance seat assignments, bottled water and carry-on luggage. Revenue from ancillary services typically exceeds the ticket prices of these airlines.
“As we continue to see demand and competitive environments develop, we know we must also change with the times,” Spirit Chief Commercial Officer Matt Klein said on an earnings conference call earlier this month. “We will continue to test new marketing strategies, which we anticipate will change the way we think about the components of total revenue generation.”
Both Spirit and Frontier are trying to return to profitability in the wake of the Covid-19 pandemic, while larger airlines offering basic fares to domestic destinations and large international networks have posted profits.
Most of the larger rivals, such as Delta, American, Alaska and United got rid of change fees during the pandemic, except for the cheapest and most restrictive tickets. Southwest Airlines does not charge customers a flight change fee.
In addition to getting rid of exchange fees, Border also announced Friday that it will begin offering packages that include additional options like early boarding and checked bags that they previously offered a la carte.
Spirit also offers combo packages with variable pricing that include perks like checked bags.
President Joe Biden and the Department of Transportation have been cracking down on what they consider “junk fees.” As part of that push, the DOT issued a new rule requiring airlines to be upfront about additional fees, such as those for checked or carry-on baggage, which was subsequently challenged by a slew of airlines.
Spirit said the end of cancellation fees was not tied to the new rules.
The Biden administration also recently issued a new rule requiring airlines to offer automatic cash refunds for cancellations instead of responding to a customer's request.
