Is Spirit Airlines going out of business as soon as this weekend? It’s possible, but if it does it spells bad news for all flyers in the US, not just Spirit’s.
Other Carriers Pouncing On Spirits Misfortune
The media and other carriers seem to be all but certain that Spirit is moments away from shutting down. American scooped up a pair of gates at Chicago O’Hare International for a combined $30MM. The notion that the Ultra Low Cost Carrier (ULCC) is all but done has permeated boardrooms and newsrooms as a critical $100 million note was due, potentially ending service as early as Saturday, December 12, 2025. Management issued this statement:
“There is no truth to any rumors that we are preparing to cease operations. It is business as usual at Spirit, and flights continue to operate normally. We are working closely with our debtor-in-possession (‘DIP’) providers and other key stakeholders on a wide variety of issues to support the financial needs and future of the business, as we have been throughout our restructuring process.” – Dayton 247 Now
It was reported that major US airlines are planning to seize on Spirit’s collapse which could involve asset purchases, employee hiring, and rescue fares for those stranded if the carrier were to suddenly cease operations.
Neelman’s (Breeze, JetBlue) Tragic Generalization
“There’s room for a ULCC in the U.S. but probably not two,” according to the JetBlue and Breeze founder.” – The Street
David Neelman’s opinion carrier far more weight than my own, after all he ran and sold Morris Air to Southwest Airlines, started WestJet in Canada and JetBlue in the US, then Azul in Brazil, and lastly Breeze. I have yet to run an airline – though there’s still time.
However, what Neelman overlooks is the complex differences between Frontier and Spirit. Frontier mostly flies to smaller, lesser used airports in leisure destinations and runs an inconsistent schedule. Flyers might choose Frontier for a nonstop between Cleveland and Fort Myers but can’t go nonstop on Tuesdays or Wednesdays, Kansas City-Phoenix doesn’t run midweek, Columbus-Orlando is a heavy weekend bias.
Spirit is (or was) flying more consistent daily routes between major airports and business cities.
Both carriers are in the same pricing category but they have very different models. Spirit has had very fast wifi for quite some time, Frontier is just adding it now. Spirit’s loyalty program was far superior, it offers a variety of different product models including a first class-like seat at the front of the plane but also European-style business class with an open middle seat.
That throwaway line from Neelman also ignores markets where two ULCCs (or more) have been successful. The United States is the largest air market in the world by far. Europe has Ryan Air, EasyJet, WizzAir, Vueling, and a handful of others. Ryan Air is third-largest in the world ahead of United, Southwest, all of Lufthansa and IAG by passenger volume servicing as many passengers as KLM-Air France, and Turkish Airlines combined. That ignores the nuances of alternate ULCC models in Europe too like holiday package and tour operators like Jet2, TUI, and more.
Why Are Flag Carriers Talking About Spirit’s Collapse If They Don’t Share Customers?
Neelman isn’t alone. United CEO, Scott Kirby recently also confirmed the ULCC business doesn’t work.
“The ULCC business model was an interesting experiment, but the consumer has voted and it has failed,” Kirby said during the US Chamber of Commerce Global Aviation Summit in Washington, DC.” – Flight Global
But is it dead?
United’s largest growth category last year was its Basic Economy segment which offers a no frills approach inside of the airline’s regularly scheduled flights. These compete directly with Spirit on price and amenities by stripping away any extras other than snacks and drinks. United itself is the fastest growing ULCC, employing the business model within its existing structure.
The majors say that ULCCs are unnecessary with high competition but this is a fallacy, especially in business markets. Pittsburgh to New York City had Delta, American, and United before Spirit launched LaGuardia and Newark options. For the short flight (about 45 minutes) the three carriers charged between $250-650 for a seat in coach. Spirit entered the market with roundtrips in the range of $100 for off-peak days, and fares dropped across all carriers to near Spirit prices.
This was initially called the Southwest effect, now the Spirit effect.
That’s going to matter a lot for flyers of all carriers if Spirit is no more. Prices that were depressed as airlines held their ground against Spirit disappear when the yellow planes do, so even flyers that never stepped onto a Spirit aircraft will feel a significant shift.
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Some segments of the marketplace simply won’t travel as often. The rest of the travel space that relied on this segment will also have to raise prices to accommodate for lower demand. Most Live And Let’s Fly readers won’t feel these increases, but the most sensitive flyers will.
Conclusion
Perhaps Spirit will survive the weekend, and perhaps it won’t. At time-of-writing, Spirit is operational. The effect the airline had on the market will be felt by consumers and especially by those who can ill-afford additional cost increases. Whether you flew Spirit or not, the US air travel market was better with Spirit in it, and I hope they find a way to survive.
What do you think?
Keep in mind that those wonderful PIT-NYC fares happened because each ticket was subsidized by the stockholders, creditors, and employees of Spirit, not because their business model made it possible.
Goforaride has it just right. when those mentioned get tired of chipping in, it is game over.
The biggest issue preventing ULCC success in the US is a whole travel ecosystem at odds with their success.
In Europe, the ULCCs succeed by:
– Flying to tertiary airports. ULCCs in Europe largely avoid high fee, capacity constrained, major airports. Although the US has these airports, they’re either not open at all to commercial traffic or they’re significantly limited in that capacity. Imagine airports like Greeley-Weld County Airport (GXY) or Millville (NJ) Airport (MIV) getting regular ULCC service. Although you could probably throw enough flights and money at these airports to change customer behavior sufficiently to generate traffic, long term, the communities in which they’re located would reject commercial flights and no government would be able to overcome the legal morass such resistance would inevitably create.
– Include nothing in the base fare. This is an area where US ULCCs and even legacies are having some success, but again and again, these successes are met with bad press. In what I can only describe as a leapfrog effect, the relatively early adoption of air travel by Americans has created a widespread feeling that an air ticket should include certain things. Even when these things are no longer included, there is a perception of something missing, even if the person having that feeling never actually flew in the period being “missed”. Europeans, by and large, didn’t take to the skies en masse until ULCCs came on the scene. The sort of bus like depravation that’s part and parcel to the Ryanair experience is just how things are, meaning that the experience isn’t perceived as some sort of penalty reserved exclusively for people that can’t afford anything better.
– Selling add ons. Fully independent travel just doesn’t have the same allure to European consumers that it does to Americans, probably because of language. Although there are certainly large numbers of Europeans pulling up wizzair dot com, buying a ticket, and heading off to Albania, a non-zero number of consumers are also booking their hotel on that same website. If you multiply that across thousands of passengers, that’s a not insignificant amount of incremental revenue. Essentially, additional travel booking pass throughs serve European ULCCs like loyalty programs prop up mainline carriers. For what can only be cultural reasons, North American ULCCs have largely missed this revenue opportunity in any meaningful way.
This is why Allegiant is a far superior ULCC model – they avoid all these high cost congested airports