For September, fares declined nationally by 13% when compared with September 2022, according to data from the U.S. Bureau of Labor Statistics. They were down 6.5% from September 2019, which was months before the COVID-19 pandemic broke out.

While consumers whipsawed by sharply higher prices are happy to be cut a break, airline managements have started to adjust their strategies for the coming year amid slippages in demand and persistently high fuel costs.

Financially, the year is becoming a turbulent one for the airlines, according to data from the U.S. Department of Transportation, which reported an industrywide net loss among 26 scheduled airlines of $1.2 billion in the first quarter and a net profit of $5.5 billion in the second quarter. But as the third quarter reporting period unfolds, the results have been mostly losses or lower profits for carriers checking in thus far, highlighted by Delta reporting a large profit while American posted a sizable loss.

South Florida-based ultra low cost carrier Spirit Airlines, which posted a $157.6 million net loss, said it would scale back its growth plans. JetBlue Airways of New York, which wants to take over Spirit, lost $153 million and forecast another deficit for the fourth quarter.

Southwest Airlines, which posted a profit that was 30% below last year’s third quarter, announced changes in its route system starting in June 2024. The plan includes the shift to Orlando of most of its nonstop international flights from Fort Lauderdale-Hollywood International Airport.

While no one is forecasting a financial washout for any of the airlines, the industry landscape is undergoing changes as the larger carriers start making things uncomfortable for the low-cost budget carriers, analysts say.

Budget carriers under pressure

“None of the budget airlines at least for now are at the risk of bankruptcy,” said Henry Harteveldt, of Atmosphere Research Group, a San Francisco-based advisory firm. “They all have cash balances and assets they can leverage to raise additional cash if necessary.”

“However, it’s very clear that larger airlines are starting to leverage their basic economy fare products more than they have in the past to compete for the customer base,” he said. “And that is going to make life more difficult for the budget airlines.”

“Southwest has been very aggressive so far this fall in offering a number of fare sales sometimes with flights starting as low as $29,” Harteveldt said.

Moreover, infrequent travelers who are “brand agnostic” are checking out amenities offered by the bigger airlines as alternatives to fee-based onboard services offered by the discount carriers.

“The airline industry is brutal when it comes to price-based competition,” Harteveldt said. “Our research shows 15% of passengers have loyalty.to some airline or alliance while 85% are making their airline purchasing decisions trip-to-trip. A lot of them divide their loyalties among multiple airlines.”

A takeover hangs in the balance

Looming in the background is the Biden Administration’s antitrust lawsuit that seeks to stop JetBlue’s $3.8 billion takeover of Spirit. The U.S. Justice Department, in concert with several Northeast states and the District of Columbia, argue the takeover would raise prices for consumers because Spirit would disappear after a deal is closed.

The case went to trial in a Boston federal court last Tuesday.

A win for the government would likely dash JetBlue’s expansion plans, which the carrier argues are critical for it to grow and offset a so-called “Big Four” domination of the industry by American, Delta, Southwest and United. A defeat would also likely squelch JetBlue’s ambitions to expand across Florida.

South Florida’s three international airports are among the most well-served in the country by lower-cost airlines ranging from Spirit and JetBlue to Allegiant and Sun Country. At Fort Lauderdale-Hollywood International relative newcomers Avelo and Flair have entered the picture, providing consumers with travel choices to cities that were unavailable before those carriers took flight.

For its part, Allegiant Air, which is the centerpiece of a travel company based in Las Vegas, Nev., is hoping for a JetBlue court victory in Boston.

In a September deal designed to help mitigate government concerns that JetBlue’s takeover of Spirit would boost consumer prices, JetBlue agreed to transfer to Allegiant all Spirit holdings at Boston Logan International Airport and Newark Liberty International Airport. JetBlue would also turn over up to five gates and related ground facilities at Fort Lauderdale-Hollywood International “to promote ultra-low-cost carrier growth,” the airlines said.

The deal followed another by JetBlue that would shift Spirit’s holdings at New York’s LaGuardia Airport to Denver-based Frontier.

Approvals of both deals are required from local airport authorities, the FAA and DOT, and would occur after the closing of JetBlue’s buyout of Spirit in the first half of 2024.

In theory, the agreements would redistribute discounted flight services to consumers flying out of Fort Lauderdale to two other airlines — Frontier and Allegiant.

Allegiant, which along with Frontier also posted losses in the third quarter, is sticking with its strategy of providing unbundled fares off a low base price.

“Affordable fares are the foundation of Allegiant’s business model and consumers can continue to expect industry-low fares across our network,” the company said in a statement to the South Florida Sun Sentinel.

In the interim, will fares industrywide continue their downward trend?

“There is still a lot of uncertainty,” Harteveldt said. “What happens if there is a government shutdown? What happens if we have more strikes or if strikes are resolved? American and United are negotiating with the unions representing flight attendants.”

A likely outcome: Higher labor costs, and, perhaps, higher fares.

According to data provided by FlightAware, an online tracker of worldwide daily commercial airline activity, the Miramar-based discount carrier led the industry with 98 flight cancellations as the day unfolded.

“We’ve canceled a portion of our scheduled flights to perform a necessary inspection of a small section of 25 of our aircraft,” Spirit said in a statement. “While this action is being taken out of an abundance of caution, the impact to our network is expected to last several days as we complete the inspections and work to return to normal operations.”

Neither the FAA nor Spirit identified what the inspections entailed.

“The FAA is aware that Spirit Airlines removed approximately 25 of its Airbus airplanes from service to conduct a mandatory maintenance inspection,” the agency said in a statement provided to the South Florida Sun Sentinel. “The FAA will ensure that the matter is addressed before the airplanes are returned to service.”

It remained unclear how broadly the cancellations are affecting Spirit’s route network, which includes destinations across the U.S., in Central and South America, and the Caribbean.

The FlightAware data showed flight cancellations in general were nominal Friday morning at South Florida’s three international airports in Broward, Palm Beach and Miami-Dade counties.

What customers should do next

In its statement, airline management encouraged passengers to “monitor their email and check their flight status on spirit.com or the Spirit Airlines App before heading to the airport.”

Travelers whose Spirit flights are canceled can accept a rebooking on the next available flight. Or, they can cancel their booking entirely and ask for a refund, “which may be credited back to your original form of payment or as a Spirit Airlines flight credit,” according to the personal finance website NerdWallet.

The U.S. Department of Transportation says if a traveler’s flight is canceled, and an airline cannot rebook the flier or the person decides not to travel, the customer is entitled to a full refund of the unused portion of the trip. That also includes fees charged for services such as seat selection and baggage checking.

Spirit, known as an ultra low-cost carrier, is poised to be taken over by discounter JetBlue Airways of New York for $3.8 billion.

But the Biden Administration has sued to stop the combination. An antitrust trial on the matter is scheduled to start Monday before a federal judge in Boston.

Elsewhere around the island this year, luxury auto sales mogul Michael Cantanucci bought a mansion on North County Road for $170 million. And fashion designer Tommy Hilfiger sold a 6,500-square-foot home built in 1927 on South Ocean Boulevard for $41.4 million.

So why did a New York State judge last Tuesday place Mar-a-Lago’s value in a range of $18 million to $27.6 million?

Those figures, based on an assessment by the Palm Beach County Property Appraiser, arose after New York State Attorney General Letitia James sued former President Trump, his Trump Organization and three family members alleging they overvalued assets and exaggerated his net worth while securing loans and insurance while building his real estate empire.

The use of those numbers by New York State Supreme Court Justice Arthur Engoron stunned real estate professionals who either deal in or help manage some of the priciest estates and mansions that occupy the island haven for the rich and famous. The judge last Tuesday concluded Trump had committed business fraud against banks and insurers and ordered various business licenses in the state of New York rescinded.

“The value of $18 million to me is way off the mark,” said Billy Nash, founder of Nash Luxury at Illustrated Properties, a division of The Keyes Co.

“At the end of the day the market dictates value,” he said. “If you had that property on the market for $18 million, there would  be 100 people lined up to buy it. And it’s an historical landmark. I would put it in the category of a Henry Flagler estate.”

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Flagler, the railroad baron and development pioneer, extended his Florida East Coast Railway line to South Florida in the early 1900s. Socialite Marjorie Merriweather Post built Mar-a-Lago between 1924 and 1927. The estate, whose name means “Sea to Lake” in Spanish for its location between the Atlantic Ocean and Lake Worth, cost $7 million to construct or roughly $90 million in modern-day dollars, according to Smithsonian Magazine.

The valuation dispute is the latest controversy involving the estate, which was the scene of an FBI raid in connection with the U.S. Government’s criminal case against Trump over his alleged illegal retention of classified documents.

“The market is screaming over this because it’s obviously incorrect,” Nash said of the judge’s ruling.  “People in real estate are scratching their heads: How do you come up with this number? There is a lack of supply that continues on the island. It is a sought-after destination by people from all over the world.”

Mendy Katz, founder of Monarch Estate Services of Greenwich, Conn., which helps owners manage their luxury properties in the Northeast, Florida and elsewhere, said the market dictates value. The demand for homes in Palm Beach, he said, remains high.

“Clearly supply and demand is what drives up the price,” he said. ”The assessor will determine what the taxes cost. That has nothing to do with the actual value of the property.”

Ken Johnson, a real estate economist at the Florida Atlantic University College of Business, said it’s a difficult task assigning values to the behemoth trophy properties of Palm Beach.

“If you take the name out of it and this was someone else in Palm Beach, it’s very hard to assess value there because these are very unique properties,” he said. “They don’t trade very often.”

An earthquake of a ruling

Engoron last week ordered the cancellations of Trump’s business licenses, a move that would make it difficult for the family organizations to do business in New York. The ruling swept aside the need for a trial to determine whether Trump fraudulently received favorable terms for loans and insurance.

James in her lawsuit asserted that Trump inflated the value of his properties by as much as $2.2 billion. She is seeking a penalty of $250 million.

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A trial on penalty phase of the case is scheduled to start Monday.

Florida lawyer Christopher M. Kise, who is among those defending Trump in the case, said he would appeal after calling the decision “completely disconnected from the facts and governing law,” according to media reports.

The former president called the judge “deranged,” and the ruling “un-American.’

“I have a Deranged, Trump Hating Judge, who RAILROADED this FAKE CASE through a NYS Court at a speed never before seen,” he declared on his Truth Social platform Wednesday.

In reality, he said, Mar-a-Lago “could be worth almost 100 times” the $18 million figure. During testimony last year, he told state prosecutors the estate is worth $1.5 billion, citing local brokers. Trump, who bought the estate in 1985, noted that he never put the property up for sale.

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The judge concluded that Trump overvalued Mar-a-Lago, inflating its value on one financial statement by as much as 2,300%.

One of the real estate professionals who suggested it is worth more than $1 billion was Lawrence Moens of Palm Beach, who was called to testify via deposition for the defense as an expert witness.

Recounting Moens’ testimony, the judge was dismissive.

“In his sworn deposition, when asked “who were the dozen or so (qualified) buyers that you were referencing in your report, Lawrence Moens replied: (he) could dream up anyone from Elon Musk to Bill Gates and everyone in between. Kings, emperors, heads of state. But with net worths in the multiple billions.”

“Obviously, this Court cannot consider an ‘expert affidavit’ that is based on unexplained and unsubstantiated dream(s),” the judge noted.

But Moens is well-versed in the Palm Beach market. A broker in town for decades, he recently represented the seller in the $170 million sale of the mansion to Michael Cantanucci, the auto dealer..

Moens did not respond to a telephone message left at his office on Friday.

It’s about the deed

The valuation used by the judge, according to the spokeswoman for the appraiser office, was based on a deed restriction that Trump signed in 1995.

In the “Deed of Conservation and Preservation Easement,” Trump was barred from using the property as a residence, and allowed to use it only as a social club.

Later, the deed’s provisions were further tightened to prohibit development or use for anything else besides a club.

Yet, James asserted in her lawsuit that Trump falsely valued the resort at $347 million to $739 million from 2011 to 2021. The numbers were based, she said,  “on the false premise that it was unrestricted property and could be developed for residential use.”

During the same period, she noted, Mar-a-Lago was assessed by Palm Beach County based on its restricted use as a social club. The figures: Between $18 million and $27.6 million.

In early 2021, after Trump left the White House, the head of the Palm Beach Town Council told the South Florida Sun Sentinel that the former president was free to live at his estate, despite concerns from neighbors who want him evicted.

Some of Trump’s neighbors alleged that he violated a 1993 agreement with the town that limits the number of days club members can stay in the estate’s guest suites.

John Marion, Trump’s lawyer in Palm Beach, said at the time that nothing in the agreement barred Trump from residing at Mar-a-Lago, and Trump could live there under the town’s zoning rules because he is a “bona fide employee” of the club.

His presence there over the last two years does not appear to have influenced how the county values the property for tax purposes

“The deed restriction impacts how we value it,” spokeswoman Becky Robinson said in a telephone interview on Thursday. “We use an income approach. We research what the income of the property would be and come up with a valuation.”

“We are a government agency and we appraise properties for taxation,” she added. “It’s different than what a private appraiser would do for loan purposes.”

Fraud: How was it possible?

Some questioned how Trump could manipulate the institutions that provided him with loans and insurance in the first place.

“I don’t see how any homeowner can manipulate a bank unless you sat on the board of a bank,” FAU real estate economist Johnson said. “Even the banks will have a loan committee where if they are worried about a property they will order appraisals.”

“When banks are lending in places with ultra values, before they make a loan they will go out and investigate the value of that home,” he added. They are not just going to take the owner’s word.”

Said Katz, the estate services manager: “There are checks and balances with every purchase. It’s really difficult for somebody to play this game and create fraud.”