As with most things, there will undoubtedly be caveats (i.e. booking budget will be great for some while not for others). The goal of this newsletter will be to:

• Explain budget/ULCCs airlines

  • A low-cost carrier or low-cost airline, also called a budget or discount airline, is an airline that is operated with an emphasis on minimizing operating costs to the airline which may secondarily be cheaper for the consumer by proxy. It sacrifices certain traditional airline luxuries, for cheaper fares.* These trade-offs can be seen in carriers such as Frontier, Spirit, Breeze, Avelo within the US and Ryanair or Wizzair in Europe. These carriers often offer low cost base fares that have historically excluded things like carry-ons, seat selections, and free changes and offer these options at an additional cost. They vary in quality of in flight service and product offerings. However, many operate with a point-to-point model (Breeze) rather than within hub-and-spoke networks (Southwest). This means that they usually boast more nonstop options but with a smaller potential network based on connections in comparison to legacy airlines. For long haul flights, such as routes operated by PLAY or Level, they can be a cost effective way to travel abroad for a short period of time when a checked bag or paying for an additional carry-on works out to be cheaper than on legacy airlines.

  *Note: there is a marginal difference between LCCs (low cost carriers) and ULCCs (ultra low cost carriers)*. A LCC would be akin to jetBlue, whereas an ULCC would be akin to Spirit or Frontier.

  On the former, you get a better in-flight product (snacks, drinks, carry-on bags… from Sept 6th onward) and on the latter you’re receiving the bare minimum (free ticket changes and a personal item) then paying add-on costs for most everything else.

  A good example of a higher quality ULCC domestically is Breeze. They operate with a smooth onboard experience and product offering, are fairly priced, have a variety of nonstop or one stop options, and the price to add a carry-on or checked bag is reasonable. Similarly, is international budget airline PLAY or Norse. When they run sales for fares from their US departures to destinations in Europe, if the travel dates on sale align with your travel dates and you’ve not booked tickets yet, it can be the better option if you’re one who packs light and isn’t planning on staying for weeks at a time. Their in flight offerings will be different compared to American, Delta, Aer Lingus, Icelandair, and others, but if in flight product offerings, seat pitch, and additional baggage fees aren’t a deterrent with price being your main focus, they can often work out to being a solid option. Keep in mind, however, that bundled ULCC tickets can also be very competitive with extra legroom seat packages on legacy airlines if that’s something you are already paying for, too. For a long-haul international flight, there can be a direct comparison to legacy premium economy on legacy carriers as well due to the ability to add extra legroom seats to your ULCC bundle without paying for other in-flight products or services that you may not want.

  A way to think about this is bundled cable: one pays a flat rate and receives *everything* no matter if it’s content they want. While one could pay for Netflix, Disney+, and ESPN, for less while getting the content they want and will use. This gives travelers the ability to choose what they want and gain access to what they only deem valuable, without any additional faff. In short, while there’s a perception that adding in all the extras makes a budget ticket a bad deal (and that’s often the case!) it’s usually worth checking and pricing it out to see how a fully-upgraded budget airline/ULCC ticket compares to a legacy airline. That’s doubly true in recent years where legacy airlines have tried to imitate budget airlines more and more as a cost-saving measure.

  Here’s a breakdown of what’s included on standard base and bundled ULCCs fares in comparison to legacy airlines base fares for short haul domestic flights:

*Spirit includes free ticket changes up to an hour before departure, Frontier is 60 days before

**Spirit charges different rates for additional bags after booking, at the airport, and at the gate.

Note: Spirit and Frontier flight estimates in the chart are based on routes from LAX-SEA (Spirit) and LAX-PHX (Frontier), with both being roundtrip. Prices may vary greatly by route and time of planned travel.

And for long haul international flights (with premium economy included for comparison as well):

*For ULCCs, exact costs will vary based on a given route; we’ve opted to showcase routes from New York to Barcelona or London for all airlines (depending on availability) save Cathay and Zipair, which are operated primarily from the west coast. In this case, Los Angeles to Tokyo was represented by Zipair and Seattle to Taipei City by Cathay..

If charts aren’t your thing, here’s a tangible example with a route from JFK-BCN (New York City to Barcelona, Spain):

Booking a Level ticket with all the extras - bags, premium economy seat, meals, changes - costs less than a basic economy ticket on Delta on many dates, and certainly less than an upgraded ticket that includes the same things. This isn’t always true, but frequently it can be and is worth checking.

One last thing to note is that these examples are particularly common for longhaul international routes with budget carriers. Legacy carriers have increased their fees rapidly on these routes, and budget carriers are increasingly a good deal.

This is rarely the case on domestic or short-haul routes though in the hyper-competitive US domestic market, budget carriers (Spirit, Frontier, Breeze, etc.) will often work it out so their base fare + fees comes out to just about the same number as a ticket with comparable services included on a legacy carrier. They have the advantage of winning the algorithm war on search engines like Google Flights or Skyscanner by having a much lower base fare, but are conscious that folks are comparing all the way to the final booking page. Thus they’ll calculate their fees in many cases to ensure they don’t blow the legacy airlines’ (American, Delta, etc.) prices out of the water once bags, seats, and the like are added.

What changes have been made recently to warrant this advice newsletter:

• A big change that has shaken up the industry is the formality of ridding not just airlines of extra fees, but also other industries as well. The Biden-Harris administration put into law that “junk fees” (fees created either to confuse customers or to take advantage of the situational market power that business may hold) are no longer feasible for businesses to charge. We can break this down into the following categories:

  1. Mandatory fees that often hide the full price. Some sellers publish a low price and then add mandatory fees later, at the “back-end” of the buying process or when a consumer tries to terminate the service, such as cancelation fees. As the research shows, by hiding the full price, this practice can lead consumers to pay more than they would otherwise, and it also makes it hard for consumers to comparison shop. An example is the “service fees” added to the cost of a ticket to a concert or sporting event.

  2. Surprise fees that consumers learn about after purchase. Surprise fees that consumers do not expect – and which may not be mandatory – similarly make it hard to comparison shop and can burden household finances.

  3. Exploitative or predatory fees. Excessive fees that target consumers who have limited alternative options – because they are locked into a product or service, or are otherwise economically vulnerable – can likewise impose a financial burden. As the CFPB explains, a sign of exploitative fees is that they “far exceed the marginal cost of the service they purport to cover.” Bank overdraft fees, which greatly exceed the bank’s cost of credit, and surprise “termination fees” are leading examples.

  4. Fraudulent fees. Some fees involve outright fraud or misrepresentations on the part of the seller. An example is advertising a “no fee” bank account that in practice carries significant fees.

     • According to DOT stats, “junk fees” have accounted for $5.97 billion in revenue in 2021 for airlines from reservation and change fees alone. Due to this, airlines were targeted directly in the bill and are being asked to disclose fees up front instead of at or after checkout.

     • The DOT proposed a rule that would protect travelers by ensuring they know the full price of airline tickets before they buy. It will require airlines and online search sites to disclose any fees up front such as fees to sit next to your child, for baggage, and for changes and/or cancellations. This is to protect consumers by ensuring they have The proposal seeks to provide customers the information they need to choose the actual best deal, preventing surprise fees that add up quickly and prevent competition on the basis of price. This builds on previous actions the DOT has recently taken, including issuing proposed rules that would require airlines to refund fees for checked bags that are significantly delayed and for services not actually provided (like broken WiFi), and to require refunds for delayed and cancelled flights.

     • As of now, the bill is still waiting to be passed, though new regulations and laws are still be drafted in accordance with the bill.

• What do these changes mean for travelers?

  • Some ULCCs have already implemented changes as a way of gaining trust with travelers and to get ahead of any government regulations that may be passed. This includes Frontier and Spirit paving the way for most flights having no change or cancelation fees. Additionally, we’re seeing airlines such as JetBlue trying to move out of the traditionally thought of ULCC space by including carry-on bags for travel from September 6th, 2024 onward. These types of changes introduce more competition in the product offerings of ULCCs in favor of the consumer in a market that is starting to become more regulated for the types of fees businesses can charge. Abroad, there are already similar protections in place for consumers including that the fees must be stated upfront in the total cost of the fare. In particular, the EU has offered broader protections for travelers historically than has the DOT within the US. These laws protect US travelers within the EU and who may purchase tickets on carriers who operate within the EU as well. This is something that enables ULCC airlines such as Level or PLAY to be contenders alongside US legacy carriers as they mention costs up front and boast lower base fares and taxes/fees.

• In spite of these changes, what do travelers still have to consider when opting for a budget or ULCC airline?

  • In spite of changes, something to consider when choosing between an ULCC is what the priority of your travel is. Does your priority lie with the price, in flight product, comfort, earning miles, points, or rewards (something that is relatively hard to do on an ULCC) the route they offer (is it nonstop?), and how long you’ll be traveling for.

  • Especially when traveling abroad, adding a carry-on is something that one doesn’t have to consider with legacy airlines, nor if a meal or other product offerings are included. Traveling with only the thought of travel itself, and not having to think through additional hoops to jump through (bags, seats, meals, comfort of the seats, etc.) can make choosing a legacy carrier the best choice where price isn’t at the forefront. Being able to remove the mental burden of focusing on what’s included by the airline and turning that energy toward the trip in mind can be worth the extra $50-$100 spent each way on a legacy carrier.

• Bottom line/who are these airlines best for?

  • These airlines are best for those who are price conscious, want to get somewhere for the lowest price possible, might not be staying there that long (and can therefore get away with just a personal item or just a carry-on), and for whom the in flight product, service, and seating isn’t important. Additionally keep in mind that if you do not want a carry-on and do want a checked bag, ULCCs can often have cheaper checked bag fees compared to legacy airlines. Determining how you want to travel and breaking up baggage allowance is a determining factor to keep in mind.

  • For short haul domestic flights, it can be easier to stomach a smaller seat or less legroom as it’s over relatively quickly (especially if the route is nonstop). For long haul international flights operated on Level or otherwise, it comes down to the level of comfort one wants to pass up on in order to save money on travel and utilize those funds once they’re at their final destination.