The COVID-19 pandemic devastated aviation worldwide. Airlines, airports, related companies and all of their workers were dramatically affected in myriad ways, and the recovery will take years to complete.

But as the industry rebounds, it’s discovering a somewhat different landscape than the one it left behind in March 2020.

Over the past two years, legacy carriers picked up point-to-point routes while lower-cost competitors made moves into larger hub markets they have traditionally avoided, seemingly taking pages from each other’s books.

Were these temporary responses to an unprecedented crisis or a sign of what a new normal may look like in the U.S.?

Unpredictable challenges continue to face the industry, from fuel costs to inflation to the war in Ukraine, so the future remains more of a moving target than usual. But the question remains—and the implications could be far-reaching.

ULCCs surging

Ultra-low cost carriers (ULCCs) have been enjoying a surge in leisure travel, which rebounded strongly as restrictions on travel and personal interactions eased. Allegiant, Spirit and others like them are actually doing more business now than they were pre-pandemic.

According to data from Airlines for America (A4A), Allegiant’s capacity is up more than 26 percent in the second quarter this year, compared to 2019. Spirit’s is up nearly 19 percent.

This isn’t too surprising, as their business models are built on direct routes to popular leisure destinations, mostly from medium- and small-sized markets. What is a little more surprising is that they’ve begun to aggressively invest more resources in some of the nation’s largest markets.

Allegiant’s move into larger markets during the pandemic, including Chicago Midway and Houston Hobby airports, was a step forward in its plans to grow operations, and Spirit recently expanded its presence at Newark Liberty International (including new daily flights to Pittsburgh).

Meanwhile, legacy carriers continue to lag. The slower return of business travel has impacted them more, with Delta’s capacity down 16 percent in the second quarter, and United’s more than 11 percent, according to A4A.

Greg Atkin of Ailevon Pacific Aviation Consulting doesn’t believe this is a temporary trend.

“I think (ULCCs) will continue to be a larger share of the industry than they have been historically,” he said.

He noted that the cost advantages ULCCs enjoy will persist for the foreseeable future and their quick rebound leaves them poised for big growth as higher-priced competition struggles.

For example, if the Spirit and Frontier merger is approved, their combined orders for new aircraft—if kept—would increase the new company’s fleet by 75 percent over the next five years, he said.

‘Premium leisure’

Not all the differences between ULCCs and legacy carriers are vanishing, and one industry expert believes that provides an opportunity for the larger airlines.

“Airlines are competing with each other based on price. They shouldn’t compete based on price,” said Bijan Vasigh, an aviation consultant and professor at Embry-Riddle Aeronautical University in Florida. “They should compete based on product differentiation.”

Vasigh believes ULCCs aren’t necessarily taking a larger market share so much as growing the overall pie, with their low prices creating new demand. In that regard, they’re poised to do well, he said.

But as the economy bounces back strongly and more people want to travel, some of them may want to do so in a more comfortable way than perhaps they previously had, and that shifts the game in the legacy carriers’ favor, he said.

“People are valuing different services,” he said.

Atkin agrees that a growing subset of the leisure travel segment focuses on quality more than cost, and while price remains the most significant factor in customer choice, it holds less sway than in the past.

A report that American plans a configuration for its new 787 Dreamliners that leans heavily into business class and premium economy seats would seem to support Atkins’ theory.

“There is a larger segment of that now than there has ever been, and I think (airlines) are betting that they are going to capture what you might call the ‘premium leisure’ customer, and it will effectively backfill the loss of some of the business travel,” he said.