Breeze CEO explains the airlines' secret weapon for turning a profit while some budget airlines struggle

• Breeze Airways reported its first quarterly profit since launching flights in May 2021.
• Breeze contrasts with budget competitors Spirit and Frontier, which are both struggling post-COVID.
• Breeze's niche routes and premium offerings give it an edge over its larger low-cost rivals.

Some budget airlines in the US are struggling, but not Breeze Airways.

The startup carrier on Thursday announced its first quarterly profit since launching in May 2021, a feat its CEO attributed to lucrative first-class seats, a flexible Airbus A220 fleet, and a niche route structure nothing like those used by competing Spirit or Frontier Airlines.

The privately held company said it earned more than $200 million in the fourth quarter of 2024, with an operating margin of over 4%. It said the full-year earnings of more than $680 million represent a 78% increase year over year.

Because Breeze is not publicly traded, only some financials — like those self-reported or those published by the government — are available to compare against competitors. This makes the full scope of the reported profit unclear. Some public figures suggest it's a significant improvement over its third-quarter margin of -21%.

"I think, just overall, there's a stronger environment in the industry," Breeze CEO David Neeleman told Business Insider. "You've seen that from the earnings by other airlines, that, for the most part, they are doing better than they did last year."

Breeze's profitability comes as many budget rivals have failed to turn a full-year profit since the COVID-19 pandemic halted travel and sent shockwaves through the industry. That's a 180-degree shift from before, when some low-cost airlines were growing faster than many mainline competitors.

Now, they face significant headwinds as travelers opt for more premium options offered by mainline carriers and grapple with continued high costs.

Niche routes allow Breeze to avoid tough competition

Neeleman, known for launching five airlines including JetBlue, said Breeze is the sole operator on nearly 90% of its 220 nonstop routes. It avoids major airports to focus on underserved communities, such as Vero Beach, Florida, Mobile, Alabama, and New Haven, Connecticut.

"If you live in Islip [New York] and now you can fly into Vero Beach, you don't have to fly to Orlando and drive two hours, or West Palm and drive two hours," he said. "It makes things easier."

He said Spirit and Frontier can't operate in the same markets as Breeze because they cannot sustain their larger Airbus A320 family airplanes. Breeze's fleet of 33 smaller A220 and 13 regional Embraer aircraft are easier to fill.

Neeleman said the A220 is particularly efficient for short and medium-haul flying, providing Breeze with more flexibility and customers with more route choices.

"I went to our yield management team the other day and asked, what markets do you need more of, and which ones do you need less of," Neeleman said. "They said we just need more planes."

He said that the carrier is phasing out its Embraer fleet, noting that consolidating maintenance and crew members into one aircraft type will simplify the business and lower costs.

Spirit and Frontier, on the other hand, have tried to lure customers away from mainline American Airlines, Delta Air Lines, and United Airlines by offering cheap tickets at major airports in places like New York, California, and the Southeast.

In its earnings call this month, United CEO Scott Kirby said he doesn't "see how it's possible" for low-cost carriers to profitably fly to larger airports because governments have "priced low-cost carriers out of the market."

The fees to fly into large cities are high, but budget carriers are also impacted by congestion, which leads to longer taxi times. This makes turning planes around quickly — one of the keystones of a budget business model — much more difficult.

Struggling to stay afloat in these expensive, oversaturated airports, Spirit and Frontier have adjusted their networks, cut dozens of routes, slashed capacity by flying fewer planes, and withdrawn from some markets.

Breeze has offered premium amenities since its inception

Low-cost carriers have traditionally equipped their planes with no-frills cabins, which have minimal legroom, no recline, and offer no freebies like snacks and WiFi. Even water costs extra.

Breeze, however, launched the business with a different mindset. From day one, it installed extra legroom seats and regular coach ones that recline as part of its strategy to be a "Seriously Nice" airline.

In mid-2022, it introduced first-class loungers.

All of its fleet's economy seats offer more legroom than Spirit and Frontier's basic seats, and free amenities like movies on a personal device. Customers can bundle their fares to include perks like food and bags.

Neeleman said he recognized the evolution of premium preference and approached it like a math equation.

"When you add first class on an A220, you only lose one seat per row, so we need about 50% more for the average fare for first class," he said, noting A220s only have five seats across in coach whereas A320s have six. "If we can get 60 or 70%, great, anything more than 50 it's a net positive for us."

Spirit and Frontier have had to play catchup there, too.

Mainline carriers' cheaper basic economy fares, which often come with perks like a free carry-on, WiFi, drinks and snacks, and in-flight entertainment, have further poached business.

Budget carriers have added some similar amenities to remain competitive, like adding new business-class-like seats, offering new bundling options, and waiving most change and cancel fees.