Daily Podcast: A Multi-Billion Dollar Low-Cost Merger

Today’s edition of Skift’s daily podcast discusses the merger of two major ultra low-cost carriers, Europe’s new push for measurable sustainability, and a loyalty play by a major business travel goal setter that telegraphs post-pandemic habits.

Listen

Subscribe

Episode Notes

Here’s what you need to know about the business of travel today.

Frontier Airlines and Spirit Airlines have unveiled plans to merge in a massive deal that would create the fifth largest carrier in the U.S. as well as a budget juggernaut, writes Airlines Reporter Edward Russell.

The $6.6 billion cash and stock deal, which was announced on Monday, would create an airline serving more than 145 destinations in 19 countries with more than 280 aircraft. The two companies hope to close the transaction in the second half of this year. The combined carrier would have a roughly 8 percent share of U.S. passengers based on data from the first ten months of 2021 compiled by the U.S. Bureau of Transportation Statistics.

While the merger has been approved by the boards of the both airlines, it still needs approval from the Department of Justice, which has taken a firmer line against mergers it believes could hurt customers. President Joe Biden came out last month against monopolies in key industries, describing capitalism without competition as exploitation. However, Frontier and Spirit executives have said the merger could create $1 billion in annual consumer savings from the additional flight options as well as serve smaller cities that currently have a limited number of budget flights.

We turn to Europe’s new approach for measuring tourism success. The European Commission has just released a new report calling on the travel industry to use more sustainable metrics to determine tourism’s impact on destinations on the continent, writes Global Tourism Reporter Lebawit Lily Girma.

The European Commission, along with European Union members and travel industry figures, created a 57-page report that urges tourism boards to adopt new sustainable key performance indicators and go from using basic statistics on trips and overnight stays to data on the social, environmental and economic impacts of tourism. The report also emphasizes that any future success for the European Union’s travel industry will depend on its ability to satisfy demand for sustainable travel as 82 percent of Europeans have expressed an interest in traveling more sustainably.

Finally, travel loyalty programs are poised to change significantly in the future as businesses can’t extend loyalty points and their status indefinitely. Thus, consulting company Accenture is looking to reinvent the model of a loyalty program, with a greater emphasis on sustainability, reports Corporate Travel Editor Matthew Parsons.

As hotels and airlines in particular are examining how they can best reward customers, many companies could turn away from the notions of volume and frequency that long defined loyalty programs. Accenture is helping its travel industry clients create new models for travel loyalty programs, and Parsons writes that sustainability will be a major point of emphasis as the many companies are looking to accomplish their sustainability objectives. An Accenture executive told Skift that businesses should target consumers eager to travel sustainably.