Forget no-frills: Frontier and JetBlue are chasing luxury flyers, and Wall Street is buying in
Frontier is the latest no-frills airlines trying to lure more upscale customers.
Budget airlines are trying to beat legacy airlines at their own game.
Frontier Airlines $(ULCC)$ is offering first-class tickets while reconfiguring cabins to offer passengers roomier seats, SpaceX's (SPCX) Starlink in-flight wifi and other amenities.
It's the latest budget airline trying to attract travelers willing to pay top dollar for more convenience and amenities. Not too long ago, that side of the market was almost exclusively the purview of Delta Air Lines $(DAL)$ and United Airlines $(UAL)$ - the first U.S. carriers to set their sights on luxury travelers and secure their loyalty with co-branded credit cards, access to fancy airport lounges and other perks.
Denver-based Frontier opened reservations for first class this week, saying it expects to complete cabin reconfigurations and fly its inaugural group of higher-style passengers by early March. It's also selling economy seats with extra legroom.
JetBlue Airways $(JBLU)$ opened bookings for its own domestic first class last month, and the first flights offering a full slate of amenities are expected to take off in December.
Before that, Southwest Airlines (LUV) shocked some of its longtime customers by offering premium seats, part of a bigger plan to reinvent itself amid pressure from shareholders that followed several quarters of dim results.
U.S. airlines are facing a squeeze from higher jet-fuel costs, as well as ongoing concerns that some consumers might become reluctant to pay for higher air fares.
No-frills airlines have fewer opportunities to make up for revenue shortfalls by tapping other income streams, such as co-branded credit cards. Plus, the demise of Spirit Airlines is still fresh in their minds.
Budget airlines have to find ways to create value for their travelers, said Henry Harteveldt, an airline-industry analyst and president of Atmosphere Research Group.
Casual, infrequent travelers are less interested in co-branded cards, Harteveldt noted; for them, pricing and flight availability still lead their travel considerations. In the current economy, more people might be willing to consider lower-cost airlines, he added.
And for their part, legacy U.S. airlines recently created multiple tiers of their most expensive seats, unbundling fares for business and first class and offering those coveted seats for less money - and fewer perks.
Reconfiguring cabins like Frontier is doing is an expensive proposition, but airlines are increasingly more willing to make that bet.
According to aviation analytics company Cirium, the percentage of domestic seats allocated to business-class and premium economy seats rose to to 7.4% last year, from 7.1% in 2022. In that same time span, the share of plain economy seats fell to 92.6% from 92.9%.
The 2026 domestic schedule has extended the pattern, with premium seats representing 7.6% of domestic seats, Cirium said.
On international flights, American Airlines (AAL), Delta and United also shifted more of their capacity toward premium cabins, mostly by adding premium economy seats. For these three airlines, the share of first-class, business-class and premium economy seats rose to 22.2% last year, from 20.5% in 2022, according to Cirium.
The shift offers an opportunity for low-cost airlines, as they have the most inventory of standard economy seats.
Frontier and JetBlue just got a vote of confidence from Deutsche Bank analysts, who recently lifted their ratings on both stocks to "buy." They pointed at their "favorable" supply stretching into next year, and said that the current backdrop of inflationary pressures - higher fuel prices included - also favors carriers that cater to "value-conscious" travelers.
Both airlines are also on the cusp of major product launches, including those premium seats. That should add to revenue and margins next year and beyond, the analysts said.
Shares of Frontier are a rare spot of green among ailing airline stocks this year. The stock has gained more than 60% so far in 2026, compared with gains of about 25% for Delta shares, the No. 2 gainer in the sector, and 9% for Southwest shares as a distant third. The U.S Global Jets ETF JETS has added around 3% in the same period.
-Claudia Assis
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