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The health of the U.S. consumer and the retail sector will be in focus in the coming week, as Black Friday kicks off a holiday shopping season that could shed light on how buyers are grappling with higher prices.
Delta and United have become the most profitable U.S. airlines by targeting premium customers while also winning back a significant share of travelers on a tight budget.
That is squeezing smaller low-fare carriers like Spirit Airlines, which filed for bankruptcy protection on Monday. Some travel industry experts think Spirit’s troubles indicate that travelers on a budget will be left with fewer choices and higher prices.
Other discount airlines are on much better financial footing than Spirit, but they too are lagging far behind the full-service airlines when it comes to recovering from the COVID-19 pandemic. Most industry experts think Frontier Airlines and other so-called ultra-low-cost carriers will fill the vacuum if Spirit shrinks, and that there is still plenty of competition to prevent prices from spiking.
Spirit Airlines has lost more than $2.2 billion since the start of 2020. Frontier has not reported a full-year profit since 2019, although that slump might end this year. And Allegiant Air’s parent company is still profitable, but less so than before the pandemic.
That kind of numbers — and of course, some promotion of his own airline — led United Airlines CEO Scott Kirby to declare recently that low-cost carriers were using “a fundamentally flawed business model” and customers hate flying on them.
Kirby’s touchdown dance might turn out to be premature, but many analysts are wary about the near-term prospects for budget airlines, which charge cheaper fares but more fees than the big airlines.
What is ailing low-cost airlines?
Low-cost airlines grew in the last two decades by undercutting big carriers on ticket prices, thanks in large part to lower costs, including hiring younger workers who were paid less than their counterparts at Delta Air Lines, United, and American Airlines. Wages have soared across the industry in the last two years, however, narrowing that cost advantage.
At the same time, the big airlines rolled out and refined their no-frills, “basic economy” tickets to compete directly with Spirit, Frontier, and other budget carriers for the most price-sensitive travelers.
The budget airlines have also become less efficient at using planes and people. As their growth slowed, they wound up with more of both than they needed. In 2019, Spirit planes were in the air an average of 12.3 hours every day. By this summer, the planes spent an average of two more hours each day sitting on the ground, where they don’t make money.
Spirit’s costs per mile jumped 32% between 2019 and 2023.
Another issue is that airlines added too many flights. Budget airlines and Southwest Airlines were among the worst offenders, but full-service airlines piled on. To make up for a drop in business travel, the big carriers added more flights on domestic leisure routes. The result: Too many seats on flights into popular tourist destinations such as Florida and Las Vegas, which drove down prices, especially for economy class tickets.
Tom Fitzgerald, an airline analyst at TD Cowen, said that after doing a good job tweaking their basic-economy offerings, the bigger airlines now are enjoying a boom on the premium travel side.
“Post-COVID, people have seemingly been willing to pay a lot more to have a better experience” with flights and lodging, he said, “and the legacy carriers are a lot better positioned to cater to that demand. They have premium economy, they have first-class.”
Seeking ‘something a little better’ in the air
Low-cost airlines are responding by following the old adage that if you can’t beat them, join them. That means going premium, following the rapidly growing household wealth among upper-income people.
Frontier Airlines organized its fares into four bundles in May, with buyers of higher-priced tickets getting extras such as priority boarding, more legroom, and checked bags. The airline dropped ticket change or cancellation fees except for the cheapest bundle.
Spirit followed in August with similar changes, blocking middle seats and charging passengers more for the comfort of aisle and window seats.
JetBlue Airways, which began flying more than 20 years ago as a low-cost carrier but with amenities, is digging out from years of steady losses. Under new CEO Joanna Geraghty, the first woman to lead a major U.S. airline, JetBlue is cutting unprofitable routes, bolstering core markets that include the Northeast and Florida, and delaying deliveries of $3 billion worth of new planes.
Perhaps the biggest change is coming at Southwest Airlines. Starting next year, Southwest will toss out a half-century tradition of “open seating” — passengers picking their own seat after boarding the plane. Executives say extensive surveying showed that 80% of customers preferred an assigned seat, and that’s especially true with coveted business travelers.
Coming out of the pandemic, “there is a clear preference for more premium,” Southwest CEO Robert Jordan said. “Premium is kind of self-defined — whether that is extra legroom, first-class to Europe, whatever it is — but there is a rise in the desire for premium, something a little better.”
Jordan said it’s not clear why demand for premium products and experiences have grown so rapidly, but figures on wealth offer one explanation.
The top one-fifth of U.S. households by income have added $35 trillion in wealth since 2019 and holds nearly nine times the wealth of the middle fifth, according to the Federal Reserve. That gives the wealthiest households plenty of money to spend on premium travel.
More crowded planes might also be pushing passengers to spend more to escape a middle seat in the back of the plane.
Whatever the reasons, Delta executives say they expect sales of premium tickets will surpass the airline’s revenue from main-cabin tickets by 2027.
An American problem?
In other parts of the world, budget carriers are doing just fine. They have bounced back from the pandemic just like their more highbrow competitors.
Some industry experts say low-cost carriers in Asia and Europe have always attracted a more diverse mix of passengers, while in the United States, affluent and middle-class travelers look down their noses at low-cost carriers.
Jamie Baker, an analyst for JPMorgan, says he has many college friends who work in London and fly Irish airline Ryanair all the time, but he hardly knows anyone who has ever been on a Spirit or Frontier plane.
“There is no stigma for anybody to fly Ryanair or easyJet in Europe. Meanwhile — not to pick on Spirit or kick them when they are down — but it’s sort of the airline booty call,” Baker recently told an audience of pilots for other airlines, who roared in laughter.
Eyeing up the competition
Delta CEO Ed Bastian is less dismissive of the “lower-end carriers” in the U.S. than United’s Kirby.
“I don’t see that segment ever disappearing,” Bastian said this week, after Spirit’s bankruptcy filing. “I think there’s a market for it.”
At the same time, he said the upscale moves by ultra-low-cost carriers are having no effect on his airline. Delta targets upscale travelers but also introduced basic-economy fares a decade ago when discounters emerged as a growing threat to poach some of Delta’s customers.
“Just calling yourself a premium carrier and actually being a premium carrier are two totally different things,” Bastian said “It’s not the size of the seat or how much room you have; it’s the overall experience.”
Consumers are expected to spend billions this holiday season on gifts, including online.
But with that comes scammers who are looking for their piece of the pie, tricking consumers into fraudulent purchases or gaining access to their funds.
Fraudsters are hoping consumers are busy during the holiday season, which may lead them to put their guard down, Margarita Alvarez, senior vice president of consumer risk programs at Wells Fargo, told USA TODAY.
"You also have scammers out there working to be able to capitalize on the higher volume of transactions that are occurring and that leads our customers to be more susceptible to these scams," Alvarez said.
Consumers lose billions to scammers each year
A recent report from the Global Anti-Scam Alliance said scammers had bilked $1.03 trillion from victims worldwide – a number the alliance said is probably actually larger since many scam victims are too embarrassed to report the crime.
A February report from the Federal Trade Commission said U.S. consumers had reported losing more than $10 billion to fraud in 2023.
A new Better Business Bureau scam study update warns holiday shoppers to be on alert, especially for fake advertisements that offer deep discounts and hard-to-find popular items. The BBB has had a 125% rise in scam reports, including scams via social media offering popular items like beauty products and viral tumbler mugs.
"Over 80% of reports to BBB indicated that they lost money, making online purchase scams one of the most common scams the public encounters," the BBB said in a press release.
Then there's theft of goods at delivery. A recent CNET report found more than $76 billion worth of packages could be vulnerable to porch theft this holiday season.
Nearly 1 in 6 U.S. adults said they'd already fallen victim to porch pirates in the past year. More than 7 in 10 consumers, or 71%, said they plan to use package tracking technology and home security cameras to protect their packages. Ten percent said they planned on getting the packages delivered to a different address when they weren't home.
Here are holiday scams to watch for – and tips to protect yourself
Here are some common holiday-themed scams and tips to avoid them. These come from a variety of sources, including Wells Fargo, Chase Bank, BMO, Feedzai, a company that helps financial institutions manage their fraud, and BioCatch, a company that works with banks to protect their customers from fraud and scams:
◾ The “it” toy scam: Scammers target emotions and frazzled parents trying to get the hottest toy with fake links. Make sure you are interacting with a reputable retailer and not clicking on unsolicited emails, said Alvarez with Wells Fargo.
◾ Fake package notifications: Be careful of clicking on an unsolicited text or email pretending to be from a legitimate company to "track" your package or help with a "lost" package.
◾ Fake charities: Scammers know people are generous at the end of the year with charitable giving. Research the charity to ensure you are donating to a legitimate cause, according to Wells Fargo.
◾ Holiday/seasonal job scams: There's a rise in part-time work during the holidays to make some extra cash. But scammers also make up fake jobs to get your money and personal information, according to Wells Fargo.
◾ Beware of gift card scams: Be careful of buying gift cards from third-party sites, said Chase Bank. Scammers will pre-save card details or sell expired cards. Don't answer unsolicited emails or text messages offering you a gift card; it could be a way to track your online activity.
◾ Watch for unsolicited “friendly” messages on social apps: Scammers first try to hook you by starting a friendly conversation and then asking for money once they earn your trust, said Chase Bank. Be careful of accepting requests from contacts you don't know and never send money.
◾ Deals that are too good to be true: Scammers will lure shoppers with deeply discounted prices or offers that are simply unbelievable, according to Feedzai. If a deal seems too good to be true, it probably is. Do your research and compare prices from different retailers before making a purchase.
◾ Double-check the website: Scammers often create fake websites that look just like legitimate online stores, according to Feedzai. Triple-check the URL web address for a slight variation in the spelling of a popular website. Look for a padlock icon on the address bar and check for "https" to indicate a secure connection.
◾ Use a secure payment method: Whenever possible, use a credit card for online purchases, said Feedzai. Credit cards offer more protection against fraud than debit cards or peer-to-peer payment apps.
◾ Be skeptical of product reviews and testimonials: Artificial intelligence can be used to create fake reviews and testimonials. Do your own research and look for reviews from trusted sources, said Feedzai.
◾ Payment app scams: Scams involving payment apps run all year long, according to BioCatch, but the volume is expected to increase during the holiday season. Most of these scams start with a call from someone pretending to be your bank or credit card company, saying there has been fraud detected on your account. They'll try to get you to transfer the money to an account to "protect" it, but it's actually an account for the scammer.
◾ Beware of account takeovers: Monitor your accounts closely for any signs of unusual activity like unexpected orders, new shipping addresses, or account updates you didn't initiate, said BioCatch. Account takeover fraud typically involves unauthorized access to accounts to make purchases or transfer funds.
◾ Stay away from public Wi-Fi when shopping: Fraudsters can exploit unsecured networks to access your sensitive data, according to BMO.
A California jury found Walmart defamed a driver with false claims of workers' compensation fraud, and now the company must pay the former worker more than $34 million in damages.
Filed in the California Superior Court in San Bernardino County, the two-part verdict filed this week said Jesus Fonseca should receive $25 million in punitive damages and $9.7 million in actual damages from the supermarket giant.
Fonseca worked for Walmart for 14 years before being fired by the company, his lawyer David deRubertis said in a statement to USA TODAY. According to a complaint obtained by USA TODAY, Fonseca was forced by Walmart to tell prospective employers that he committed fraud and violated integrity policy.
“We believe the evidence at trial showed that Walmart’s defamation of Jesse was part of a broader scheme to use false accusations to force injured truckers back to work prematurely or, if not, terminate them so that Walmart can cut down workers’ compensation costs,” deRubertis said in a social media post.
What happened?
Fonseca was injured while working when a semi-truck was rear-ended by another truck, deRubertis said. He then filed a workers’ compensation claim in which Fonseca told the company he was under doctors' orders which restricted his driving at work.
Walmart then fired him, citing surveillance work that showed him driving a personal car and seeing Fonseca "bending for a matter of minutes", according to deRubertis.
“The notion that someone possibly performing daily activities outside of their work restrictions amounts to fraud is preposterous,” the complaint said. “Yet, even if an employee with work restrictions inadvertently violates them, this does not amount to fraud in the workplace.”
Walmart called the jury's decision "outrageous" in a statement to USA TODAY.
“This outrageous verdict simply does not reflect the straightforward and uncontested facts of this case. Accordingly, we will pursue all available remedies,” the company said.
As every year, late November brings the time to worry about Thanksgiving. Not only is it time to gather the family, but also to start preparing for dinner and that includes checking where the best prices are and going shopping.
According to a recent analysis by the American Farm Bureau Federation (AFBF), a “classic” Thanksgiving dinner for a group of 10 is expected to cost $58.08 on average this year. This figure represents a 5% decrease from 2023 and a 9% decrease from 2022.
The $58 includes the price of the basic items needed for dinner, such as turkey, stuffing, sweet potatoes, rolls, frozen peas, fresh cranberries, celery, carrots, pumpkin pie mix, and dessert crusts, as well as whipped cream and whole milk.
The cheapest turkey in supermarkets
Research conducted by Finance Buzz has revealed which stores have the cheapest turkeys on offer:
- Target: $9.48
- Walmart: $11.88
- Albertsons: $11.88
- Aldi: $12.84
- H-E-B: $17.76
Why is turkey cheaper this year?
According to the AFBF, a 16-pound turkey accounts for 44.2% of a Thanksgiving dinner for 10 this year. Even though it’s a large portion of the total dinner, the price of turkey has decreased by 6%. The reason for this decline in turkey prices is that both the breeding of these animals and the demand for them have declined.
According to the USDA’s November 2024 Livestock, Dairy, and Poultry Outlook report, turkey production in September was 4.2 percent lower than a year earlier. Slaughters are down 8.3 percent year-over-year.
Dollar Tree, the popular discount retail chain, is currently offering nearly 9,000 job opportunities across its various stores in the United States. This significant hiring initiative aims to strengthen the company’s workforce and improve customer service in its retail locations.
The company currently employs 193,000 people, making this hiring represent an increase in staff numbers by nearly 5%.
Dollar Tree is primarily seeking the role of sales floor associates. These employees are responsible for maintaining the sales floor, assisting customers, and ensuring a positive shopping experience. Based on the uploaded job postings, pay ranges from $16 upwards, depending on the state.
The company has set specific criteria for potential candidates:
- Minimum age requirement: 18 years old
- Physical capability: Ability to lift up to 40 pounds regularly
- Availability: Must be able to work flexible hours, including evenings, weekends, and holidays
- Skills: Strong customer service orientation and basic math skills
Applying is easy and can be done so through the company’s employment portal.