Between rising operating costs and increased competition in not just large but increasingly regional markets, the past model of luring travelers in with rock-bottom fares and making up for the difference with fees for features such as baggage and seat selection has stopped being profitable for most low-cost airlines.
As the pressure of two bankruptcies filed within a year of each other mount, Spirit Airlines recently sought to sell a number of its gates in Chicago’s O’Hare to United Airlines, Reuters reported. Spirit also lost one of its key credit card partners after the First Bank & Trust issuing its Free Spirit Points Mastercard announced plans to pull out of the partnership.
Amid both low passenger numbers and a reputational pressures over continuing to run migrant deportation flights for the federal government, Houston-based Avelo Airlines has exited a number of key markets and its entire West Coast network this year.
Appointed initially as interim and eventually as permanent CEO after longtime head Barry Biffle was forced out in December 2025, Frontier Airlines’ James Dempsey just gave an interview to Reuters in which he addressed similar concerns for the Denver-based airline and laid out its vision for the rest of the year.
“The model is phenomenally beneficial to consumers”: Frontier CEO
Dempsey called the rumors of a looming bankruptcy that emerged after Frontier shut down its booking system past April earlier this year — it has since been reopened — “categorically untrue.” The airline will navigate 2026 by targeting more budget-conscious travelers with fare discounts and flights during off-peak days, he added.
“We offer value to customers at fares that enable people to travel who would not otherwise travel,” Dempsey said in the interview. “We think that the model is phenomenally beneficial to consumers.”
Related: Frontier Airlines is no longer out a CEO
Dempsey said this model “puts [Frontier] in a very strong position to bring the airline back to profitability,” but the airline’s numbers spell a much more uncertain story.
The strategy of targeting travelers with less money to spend has also proven increasingly risky for other budget airlines, given that there is only so much a carrier can slash fares before it starts to struggle to cover operating costs.
Frontier Airlines
Frontier still on rocky financial ground in 2026
While the airline broke through a string of unprofitable quarters by reporting fourth-quarter income of $53 million earlier this month, it lowered its forecast for the start of 2026 to between $0.26 and $0.44 per share. The airline’s stock is also down by more than 40% from the same time last year.
“Frontier’s deeply negative margins are second only to Spirit’s, and remain among the worst peacetime margins we’ve ever witnessed,” JP Morgan equity analyst Jamie Baker wrote to investors in a recent note.
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The airline launched new routes to several cities in Florida in advance of Spring Break.
However, it also announced plans to leave 10 markets in 2026, among which are Burlington, Vermont, and Charleston, South Carolina, as it works to cut costs and chart a course in which it flies only the most profitable routes.
Related: Another regional airline files for Chapter 7 bankruptcy and liquidates
