American chases Spirit in 'race to the bottom'

American Airlines, the world's largest carrier, is feeling mosquito bites from much smaller but very aggressive discounter Spirit, and is planning to implement "less frills" fares to try to compete on the increasing number of routes where they compete head-to-head. Delta offers a similar "Basic Economy" fare.

 

The problem is that while Spirit offers no frills at all, except at a considerable set of fees, the legacy carriers like American have few frills left to cut, either. Delta's version, for instance, are non-refundable, no changes can be made, and seats are assigned only at boarding.

 

American is also concerned about competition on international routes from carriers such as Mexico's Volaris and Norwegian Air Shuttle. American has calculated that 87% of its customers fly with the airline only once a year—not exactly a loyalty bonanza.

 

And those customers are up for grabs on routes where the discounters compete head-to-head on nonstop routes. In the case of American vs. Spirit, that's 28%, and is especially heavy at Dallas-Fort Worth, AA's home. Over the past few years, Spirit's growth there has put it ahead of either Delta or United.

 

For more details and background from USA Today, click HERE

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