A big frustration for travelers in the past year has been that airfares haven't fallen as quickly as oil prices, making it expensive to get away on vacation. Prices have started to come down, though, and it's largely due to the growth of low-cost airlines serving the United States.
Southwest Airlines (NYSE:LUV) was the price leader in the U.S. airline business for a few decades. It still offers attractive fares -- at least some of the time. But in recent years, it's been eclipsed by Spirit Airlines (NYSE:SAVE) and Allegiant Travel (NASDAQ:ALGT) among travelers looking for the cheapest flights.
It's always important to compare prices and check the fees for any airline before making your travel plans. Even low-cost airlines can sometimes have competitors underprice them. But these three airlines are a good place to start your search.
The cheapest of the cheap
Among all of the low-cost airlines in the U.S., Spirit Airlines continues to stand out as the cheapest. Through the first nine months of 2015, the average fare on Spirit Airlines was less than $68.
Furthermore, price-matching activity by competitors is driving down that average fare. In Q4, the average fare for travel on Spirit Airlines is likely to fall below $60. If you're willing to do whatever it takes to save money on air travel, Spirit Airlines may be your best bet.
However, there is a catch. To keep base fares low, Spirit Airlines charges fees -- sometimes extremely high fees -- for everything other than a spot on the plane. Want to check a bag? It'll cost you. Want to carry on a bag? That'll cost you, too -- unless it's a backpack that can fit under the seat in front of you. And if you're thirsty, getting a (non-alcoholic) drink on board will generally set you back $2-$3.
Most importantly, if you'll be traveling as a family, you should know that Spirit Airlines charges for seat assignments. You can avoid the fee by letting Spirit Airlines pick seats for you, but you'll probably wind up spread out around the cabin in various middle seats.
Spirit Airlines is usually the best of the low-cost airlines when you're traveling alone on a short trip and can pack lightly. (You can check out my travel review here.) It can also work well for longer trips in larger groups if you're willing to make some sacrifices and you plan ahead to minimize the additional fees you pay.
But if you're not careful, you could easily find that all of your "savings" have been wiped out by additional fees. Indeed, Spirit generates an average of about $54 per passenger in non-ticket revenue.
No nickel-and-diming here
If you can't stand Spirit Airlines' nickel-and-diming, then Southwest Airlines might be the low-cost airline for you. Southwest Airlines is the only carrier left in the U.S. that allows all of its customers to check not just one but two bags for free. Carry-ons are free, too, and the company also doesn't charge change fees.
This fall, Southwest Airlines has been highlighting these unique, customer-friendly policies as part of its "Transfarency" ad campaign. Indeed, if you're bringing several bags and want to choose your own seat, you could easily pay over $100 in fees each way on Spirit Airlines or Allegiant. All of those things are included with every Southwest Airlines ticket.
However, on average, you'll pay more for these perks. Through the first nine months of 2015, the average fare on Southwest Airlines was $156.55. That's more than double the average Spirit Airlines fare, and it's also 28% higher than the average total cost of travel on Spirit Airlines, including fees.
So if you know you're going to be traveling with a lot of luggage or if you're not sure about your travel plans, Southwest is a good option, because the lack of baggage fees and change fees could save you a boatload of money. If not, other low-cost airlines may be cheaper. But it's still worth checking Southwest: In recent months it's been selling some tickets on off-peak days for as little as $41 one-way. So you just might get lucky and find a great deal!
America's small-town airline
If you live in a major city, it's possible that you've never even heard of Allegiant. That's because Allegiant Travel is unique among low-cost airlines in that it focuses on flying leisure travelers from small cities to warm-weather tourist destinations such as Florida and Las Vegas.
Allegiant's average fare isn't quite as low as that of Spirit Airlines, but it's close. In the first nine months of 2015, the average fare was $79.16. Like Spirit Airlines, Allegiant charges a wide variety of fees if you want anything more than a spot on the plane. As a result, its average total revenue per customer is $130.01 year to date.
While Allegiant's fares are slightly higher than those of Spirit Airlines, in some ways it offers a better deal. Spirit's average fare is dragged down by off-peak flying, for which it has to offer extremely low fares to fill its planes. By contrast, Allegiant concentrates its flying at peak times. So on an apples-to-apples basis -- i.e., comparing fares at peak times -- Allegiant may actually be the cheapest of the low-cost airlines.
Because of its unique strategy, Allegiant doesn't serve many of the most popular routes in the United States. That said, in recent years, the company has started entering some larger markets, such as Cincinnati, Pittsburgh, Indianapolis, Kansas City, Memphis, Austin, and San Antonio.
Many of these cities have seen big reductions in airline service because of industry consolidation. This has created an opportunity for low-cost airlines such as Allegiant to move in and stimulate demand with cheap fares.
Always shop around
Spirit Airlines, Southwest Airlines, and Allegiant Travel are certainly three of the best low-cost airlines for a cheap vacation getaway. It's always a good idea to check a fare comparison site, though. Recently, many major airlines have been matching fares from ultra-low-cost carriers such as Spirit and Allegiant to hold on to market share.
That means you might be able to get ultra-low-cost carrier fares without the corresponding high fees -- or the squashed knees. You're most likely to score a price-matching fare like this if you fly on an off-peak day.
Even if you start with a fare comparison site, that shouldn't be the end of your search. Southwest and Allegiant sell tickets almost exclusively through their websites. If you only look at flights available through an online travel agency such as Expedia, you might miss the best fare.
Adam Levine-Weinberg owns shares of Spirit Airlines. Adam Levine-Weinberg has the following options: long March 2016 $40 calls on Spirit Airlines and long June 2016 $30 calls on Spirit Airlines. The Motley Fool recommends Spirit Airlines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.