Spirit Airlines is about to be faced with a major competitor in the form of American Airlines. The world’s largest carrier is planning to launch a new bare-bones service option that will appeal to U.S. budget shoppers
American Airlines CEO Scott Kirby already announced that the company will match competitors’ prices on any nonstop route.
The company will soon begin selling cheap fares with more restrictions that will target the likes of Spirit Airlines and Southwest Airlines.
The company has not yet announced what “bare-bones” tickets will look like. With many carriers such as Spirit, a ticket starts with a base price and increases in cost as fliers add checked baggage, drink options, and other amenities.
Spirit shares fell more than 8% on news of the move.
87% of American Airlines customers flew only one-time last year, making up more than 50% of the airline’s revenue.
American Airlines earnings jumped by 80% in Q3, bringing its total to $1.7 billion. The company was helped along by low fuel prices.
For 2016, American plans to grow service by 2 to 3%