Spirit Airlines: A Legacy of Low-Fare Travel Comes to an End

On Saturday, after years of financial struggles, Spirit Airlines made the decision to shut down, resulting in the loss of 17,000 jobs and disrupting travel plans for thousands of passengers. As the pioneer of the low-fare model in the U. S. aviation industry, Spirit’s shutdown raises questions about the future of air travel and the economy.

Impact on the Industry

Some aviation experts believe that the absence of Spirit will not have a significant, long-term impact on the industry. Other airlines will likely absorb Spirit’s assets, such as gates and check-in counters, at airports in New York, Las Vegas, Fort Lauderdale, and other cities. However, with Spirit’s recent downsizing and second bankruptcy filing in two years, its influence as a major player had already diminished.

According to Cirium, an aviation data firm, in May 2024, Spirit operated only 3. 4% of domestic flights. By the time of its shutdown, that number had decreased to just 1. 1%. Therefore, its absence may not have a significant effect on market prices and competition among airlines.

Effect on Fares

Although many airlines are offering discounted fares to Spirit’s customers, experts predict that fares will eventually increase. Spirit’s presence at airports helped keep fares low, a phenomenon known as the “Spirit effect. ” However, with Spirit’s absence, airlines may have an easier time raising prices, particularly for low-fare travelers. This could result in increased fares for other airlines as well, as they compete to fill the void left by Spirit.

Some analysts argue that the impact may be overstated, as other airlines have spare seats and can absorb many of Spirit’s customers. Additionally, many of Spirit’s passengers only flew when they found very low fares, so they may choose to fly less often now. However, with the recent rise in fuel costs and warnings from airlines about potential price increases, it is likely that fares would have risen regardless of Spirit’s shutdown.

Other Winners and Losers

Spirit’s decline in recent years has actually benefited larger airlines, such as American, Delta, Southwest, and United. These carriers introduced “basic economy fares,” which are cheaper but do not include additional amenities, such as seat selection or multiple bags. This has reduced demand for tickets from low-fare carriers like Spirit.

On the other hand, smaller airlines, such as JetBlue Airways, stand to gain from Spirit’s absence. JetBlue has already been expanding at Spirit’s home base, Fort Lauderdale-Hollywood International Airport, and plans to add flights to 11 more destinations after Spirit’s shutdown.

Frontier Airlines, another low-fare competitor, may also benefit from Spirit’s absence. However, it faces similar challenges as Spirit, with many of its flights consisting of basic economy seats.

Effects on Employees and Assets

Spirit’s shutdown has suddenly made thousands of experienced airline workers available, including pilots, mechanics, and other professionals.