How Frontier’s merger with Spirit will impact the agenda of the ‘world’s greenest airline’
Last month, I boarded Frontier Airlines for a momentary escape from the winter weather in Puerto Rico. Like most customers of the carrier that bills itself as “America’s Greenest Airline,” I was traveling for leisure and had selected the flight because it was so much cheaper than other options.
That it was also the most carbon-efficient way to travel to Puerto Rico was an added perk, something Frontier proudly hails on boarding passes, during the flight, and in its messaging around its bare-bones service. One such example from the checkout page: “Keep carbon emissions low by keeping your bag weight in check. Checked bags over 40 pounds cost extra.”
But keeping the costs low are the key driving force for Frontier and Spirit Airlines, its ultra-low-cost competitor. On Feb. 7, the two airlines announced a $6.6 billion merger that is expected to close in the second half of this year, subject to regulatory review. Frontier shareholders will hold a majority stake in the combined company, whose name, logo, and branding have yet to be disclosed. What is clear is that while sustainability is an added benefit of the ultra-low-cost model, both airlines are placing greater emphasis on it as the industry faces greater scrutiny by customers and shareholders about its environmental impact.
“U.S. investors have definitely started focusing on ESG as a bigger part of their investment thesis, so this is definitely something that is going to be on everybody’s radar in the next three to five years,” says Helane Becker, an airline analyst at Cowen and Company.
While larger competitors such as Delta and United have forged corporate partnerships to make investments in sustainable aviation fuels (SAFs) and other technologies that could dramatically reduce the amount of carbon emitted by the airline industry and reshape the future of travel, the changes that Frontier cites to back up its claim as the greenest airline have more to do with stripping amenities and lightening the load of aircraft to reduce fuel burn.
“What they’re really talking about is the fact that they squish a lot of seats in,” Becker says. “They have young, fuel-efficient aircraft, so gallons-per-seat-per-mile is low relative to others who are operating a fleet of bigger aircraft.”
Frontier’s sustainability claims
Frontier introduced its tagline, “America’s Greenest Airline,” in 2018 after searching for a positive spin on its slimmer seats and small tray tables, according to Daniel Shurz, senior vice president of commercial at Frontier.
Its sustainability efforts draw from three main aspects of Frontier’s business strategy: upgrading its fleet to fuel efficient A320neo jets, packing in more passengers on each flight, and reducing the bulk on aircraft by stripping away amenities from in-flight magazines to seat cushioning. By charging fees for beverages aside from water and imposing stricter weight limits on luggage, Frontier also dissuades passengers from taking more than is necessary. If they choose to do so, the cost is passed on to them.
As CEO Barry Biffle once said about flying Frontier, according to Skift, “It is not the most comfortable for a couple of hours, but it is the most comfortable that you will find for the planet.”
It’s no coincidence that all of these changes also save the airline money, allowing it to offer cheaper flights to passengers. Burning less fuel—which is both the most expensive part of running an airline and the biggest contributor to its carbon emissions—is about saving money first and the planet second.
Shurz called Frontier’s environmental stewardship a “positive hook” but said the airline can stand by its sustainability claims, which are based on publicly verifiable data filed by the airlines and compiled by the Department of Transportation.
“We have every incentive to reduce burn economically, which is why we’re credible in our argument that we’re trying to be more efficient,” Shurz says. “Fundamentally it’s in the planet’s interests and it’s in our interests.”
Frontier calculates the fuel burned per passenger for its claim that it is the greenest, and there is widespread agreement among industry analysts and competitors that the airline does lead on this particular metric. But overall sustainability encompasses so much more, and there is no objective ranking that encompasses aspects such as investments in SAFs and reduction of food and plastic waste on board.
Frontier is not the only airline to realize this alignment between cost savings and environmental stewardship. In Europe, Ryanair CEO Michael O’Leary has invited passengers to reduce their environmental footprint by switching from carriers such as British Airways and Lufthansa.
Though Spirit has a similar business model that strips down its planes and reduces its fuel burn, the airline has been slower to tout its efficiencies as environmentally advantageous. It published its first sustainability report last year, pointing out many of the same fuel economy benefits of its business model that Frontier has previously highlighted. The report also makes a commitment “to responsible aviation and conducting business in an environmentally conscious manner.”
The reason Frontier beats Spirit in fuel economy rankings is due to its newer, more fuel-efficient fleet, but airline analysts say Spirit will likely upgrade its fleet under a combined company. Shurz said he expects sustainability will continue to be a focus in the years to come.
“It’s a good fact about the airline; it’s a good story we can tell,” he says.
Pressure is mounting for airlines to clean up their act, and carriers have introduced a broad range of measures, from recycling on board to boxed water, as a way of lowering their carbon footprint. But those efforts pale in comparison to the impact of burning jet fuel, which is the biggest contributor to all airlines’ carbon footprint.
While ultra-low-cost carriers are focused on lightening the load, that doesn’t mean other airlines will race to adopt similar measures in their push for sustainability. Price-sensitive travelers are a lucrative market for ultra-low-cost carriers, but frequent fliers like having access to first class, airport lounges, and international travel, says Savanthi Syth, an airlines analyst for Raymond James.
“There is a recognition that packing the plane is not the answer,” she says. “You’re not going to see Delta take out all their first-class seats in response to this, but they’ll find other ways to serve that customer while trying to become more environmentally friendly. Trying to burn less fuel is every airline’s goal.”
From an ESG perspective, Syth says airlines perform relatively well on social and governance—Frontier and Spirit included. They offer highly unionized, well-paying jobs and benefit their local economies. “It’s really ‘E’ that is an inherent issue,” she adds.
Growing demand for air travel is another factor to consider when it comes to sustainability. The bargain prices offered by carriers like Frontier and Spirit often “compete with the couch” and draw people to travel they might otherwise have forgone, Syth notes, adding, “If you’re growing, you’re still going to be burning more carbon dioxide this year than next year.”
While the pandemic has wreaked havoc on the airline industry, Spirit and Frontier have done relatively well. They do not offer business class and focus primarily on cost-conscious leisure travelers, a segment that recovered more quickly from the crisis than corporate travel.
At a time when some people are forgoing air travel because of its environmental impact and calling for taxes to reduce trips, the airlines don’t view growing demand as a bad thing. They point out that the industry’s relative impact on the environment—about 2% to 3% of global greenhouse gas emissions—remains small compared to ground transport, and that they have every financial incentive to make air travel more efficient.
“You don’t have this binary choice between saying ‘I will fly or not fly,’” says Chris Goater, spokesman for the International Air Transport Association. “You can fly sustainably. That’s really the holy grail.”
The international trade group has pledged to make flying net zero by 2050, but it isn’t primarily through operational and infrastructural efficiencies such as those prioritized by Frontier. Those will contribute only about 3% to achieving that goal, while the bulk of progress will come from sustainable aviation fuel, carbon capture and offsets, and new technologies such as short-haul electric planes.
“SAFs are going to be about 65% of how we’re going to mitigate our footprint,” Goater said. Extracted from renewable hydrocarbon sources such as used cooking oil and sustainable feedstock, sustainable fuels can be blended with traditional jet fuel to significantly lower the carbon emissions of a flight.
There isn’t nearly enough SAF in production right now to make it viable in the near term, and it costs about four times the price of jet fuel—making it unaffordable not just for cost-conscious carriers such as Frontier and Spirit but nearly everyone. Delta and United have experimented with corporate partnerships to purchase SAFs and make investments in the alternative fuel.
“There are many different ways to measure sustainability and fuel efficiency, and you could do it on a per-seat basis. At the end of the day, what we know is that SAF is really the most important short- and medium-term lever to make significant progress toward net zero,” says Sharon Pinkerton, senior vice president of legislative and regulatory policy for Airlines for America, a domestic trade association whose members include United, Delta, and American as well as cargo carriers such as FedEx and UPS. Collectively, they represent 90% of total U.S. airline passenger and cargo traffic.
Both IATA and Airlines for America are lobbying for government action to incentivize the expansion of sustainable aviation fuels.
Frontier’s bottom-line focus prevents it from investing in the costly alternative, but Shurz says the airline would adopt the fuel if it became more affordable. Still, he expressed skepticism about the industry’s focus on SAFs as the answer to sustainable travel.
“Other airlines are talking about the future,” Shurz notes. “We deliver [sustainability] today. Our biggest opportunity to reduce our environmental impact is to do what we’re doing.”
Under a combined company, Shurz added that he expects Frontier and Spirit to continue leading the industry on sustainability—in the specific way that they measure it.
“We are merging the most efficient airline with the second most efficient airline,” he says. “When you merge number one and number two, you’d have a hard time making it worse.”
This story is part of The Path to Zero, a special series exploring how business can lead the fight against climate change.