Why the model for low-cost airlines may be 'evaporating'
Published On Feb 17, 2025, 5:05 AM
The traditional model for low-cost airlines is deteriorating due to rising costs, increased competition from major carriers, and a shift in consumer preferences prioritizing comfort over price. Recent acquisitions and mergers in the sector have failed to materialize successfully, with Spirit Airlines rejecting proposals from Frontier Airlines. The increased operational and labor costs are reflected in the sluggish stock performance of low-cost carriers compared to traditional airlines. JetBlue and Southwest Airlines are particularly struggling due to these challenges, leading to disappointing earnings reports. Analysts and insiders are skeptical about the sustainability of the low-cost airline model as it stands now.
Stock Forecasts
JBLU
Negative
Despite a broader recovery in the airline market, traditional low-cost airlines like JetBlue and Southwest are underperforming due to increased operational costs and changing consumer preferences.
DAL
Positive
As an established carrier with a stronger traditional model, Delta is likely to continue to outperform bargain airlines in the current economic environment.
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