Spirit Airlines gets rid of change and cancellation fees, joining Frontier

1 month ago

A Spirit Airlines aircraft undergoes operations in preparation for departure at the Austin-Bergstrom Airport on February 12, 2024 in Austin, Texas. 

Brandon Bell | Getty Images

Spirit Airlines is doing away with both change and cancellation fees, effective immediately, days after Frontier's similar announcement, part of an overhaul of the country's biggest discount carriers' longtime strategy.

Prior to the new rule, Spirit used to charge anywhere from $69 to $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 enhancements in the works and look forward to sharing more soon."

The changes mark a shift for budget airlines' longtime pricing approach, which includes low base fares to attract customers and add-on fees for advanced seating assignments, bottled water and cabin baggage. Ancillary revenue routinely surpasses those airlines' ticket prices.

"As we continue to see the demand and competitive environments develop, we know that we must also change with the times," Spirit's chief commercial officer, Matt Klein, said on an earnings call earlier this month. "We will continue to test out new merchandising strategies, which we anticipate will change how we think about the components of total revenue generation."

Both Spirit and Frontier are trying to return to profitability in the wake of the pandemic, while larger airlines that offer both bare-bones fares to domestic destinations and big international networks have posted profits.

Most larger rivals like Delta, American, Alaska and United got rid of change fees during the Covid-19 pandemic except for the cheapest, most restrictive tickets. Southwest Airlines does not charge customers a flight-change fee.

Along with getting rid of change fees, Frontier also announced Friday that it will start offering bundles that include add-on options like early boarding and checked baggage that they previously offered a la carte. 

Spirit is also offering bundled packages with varying prices that include perks including checked bags.

President Joe Biden and the Department of Transportation have been cracking down on what they deem "junk fees." As part of that push, the DOT issued a new rule requiring airlines to be upfront about add-on fees like those for checked or carry-on baggage, which was subsequently challenged by a slew of airlines.

Spirit said the end of cancellation fees were not tied to the new rules.

The Biden administration also recently issued a new rule requiring airlines to offer automatic cash refunds for cancellations rather than in response to a customer's request.

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