Ultra-low-cost airlines have invested heavily in new, more efficient aircraft to reduce their operating costs.
However, the sudden rise in fuel prices and uncertainty in demand due to the war in the Middle East, particularly in Iran, are testing this business model, revealing a critical paradox: the most “modern” planes may also be the most difficult to manage.
The price of jet fuel has exceeded $200 per barrel, nearly double the levels before the crash. In this environment, even companies with the most efficient fleets are not fully protected. Traditional carriers, like United Airlines, are already reducing capacity or grounding planes to cut costs—a flexibility that ultra-low-costs don’t have to the same degree.
Frontier Airlines is a prime example. Approximately 85% of its fleet consists of Airbus A320neo, one of the most efficient aircraft families. According to the company, fuel consumption per passenger is up to 40% lower than that of competitors. The model is based on high aircraft utilization and continuous use, so that fares remain low.
However, that’s exactly where the weakness lies. As Deutsche Bank analysts point out, the new aircraft are expensive to finance, and in the event of a drop in demand, their “grounding” costs more than for older, already depreciated models. In other words, a more efficient airplane does not necessarily mean greater resilience during times of crisis.
The case of Spirit Airlines is indicative. The company, which is trying to exit bankruptcy, is considering returning or even selling newer Airbus A320neo aircraft, as the cost of maintaining them is considered excessive for current conditions.
Frontier is also forced to adapt. It has already proceeded with leasing solutions for 24 aircraft, while it has postponed the delivery of 69 new A320neo that were to be added to its fleet by 2030. Despite a 11% decrease in fuel costs in 2025, the cost of leasing aircraft also increased by 11%, showing the shift in pressure from fuel to financing.
The companies say they can manage the situation, with Frontier following the broader trend of increasing fares. However, experts point out that the problem is structural: new aircraft require a steady flow of revenue to be depreciated, which becomes more difficult in an environment of uncertainty.
Furthermore, technological progress does not come without a cost. New-generation engines, although more efficient, have increased maintenance needs and lower durability, further burdening companies’ finances.
The crisis thus reveals a strategic dilemma for the industry: investing in efficiency remains necessary for the future, but in times of geopolitical instability, it can become a financial burden. For ultra-low-cost airlines, the bet on sustainable aircraft has not been lost — but it has certainly become more risky.
Source: Reuters
