Will Spirit Airlines be a boon or a bane?

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After a flurry of self-congratulation, the Metropolitan Airports Commission announced they landed a new airline for MSP. Spirit Airlines is going to fly twice a day to Las Vegas and once a day to O’Hare, starting Memorial Day. The self-declared ultra-low-cost, no frills airline will offer less than one-half of one percent the service at MSP to start. At first glance, it is hard to see any competitive benefit there.

At second glance, their introductory fares to O’Hare could, maybe, hurt the Chicago Megabus, depending on the cost of ground transportation from O’Hare into the real city of Chicago.

Spirit’s cheap flights to Las Vegas will compete with Sun Country, the only remaining local airline. And, who flies to Vegas without a casino promotional deal on auto rental, food and lodging along with airfare?

It is a far reach to say Spirit will make Delta, United, American, Frontier, or any other airline permanently reduce fares or fees. Possibly, in fact, American, Delta and United will sell fewer economy tickets and more business class tickets for their 30 daily departures to Chicago O’Hare. 

Real competition doesn’t crowd the low-end. Real competition would offer prime-time departures, serve more destinations by direct flights, and guarantee enough capacity to eliminate over-booking.

Maybe Spirit will get a foot in the door and grow market share here. We can hope for lower average fares and fees to O’Hare if Spirit sticks out the usual major airline response: match the low fares to a few places and raise fares to many others so the losses pile up for the little guy more than the big guys.

The major airline flights to O’Hare, especially United’s and Delta’s 12 each, are half- or more filled with connecting passengers (starting a United trip or completing a Delta trip). These passengers were sold an end-to-end ticket that obscures their fare between O’Hare and MSP in either direction. This fact allows United and Delta to manipulate seat supply with little effect on their overall revenue, even from O’Hare to MSP or MSP to O’Hare.

Daily service to Las Vegas today? Three Sun Country departures. To O’Hare? Four airlines, and 30 departures. Is this less than demand? Could be, but as reported, it is a two-tiered market, and connecting passengers could fill in any new capacity with little benefit to local travelers.