Spirit’s reputation has never been strong. Consumer polls regularly place it near the bottom of U.S. carrier rankings, largely because of its extremely stripped‑down pricing: a low base fare with charges for carry‑ons, checked bags, seat assignments, food and even printed boarding passes. For years the approach worked — despite frequent customer complaints, Spirit expanded by appealing to travelers who prioritized headline price above frills. Former CEO Ben Baldanza used a retail comparison to explain the strategy: while other airlines sought to be Nordstrom or Target, Spirit aimed to be “Dollar General.”
That Dollar‑General analogy has lost some of its force. Spirit and other ultra‑low‑cost carriers (ULCCs) now face a squeeze from multiple directions: legacy airlines have adapted, costs have risen, and the market of highly price‑sensitive flyers has shrunk. Together, these forces have eaten into the razor‑thin margins that made the ULCC model viable.
The most important change is competitive: legacy carriers adopted elements of the low‑cost playbook. Over the 2010s, as budget airlines lured customers with low fares, big carriers began offering cut‑price, stripped‑down tickets labeled “basic economy.” Those fares replicate the minimal experience — fewer perks, less flexibility, often worse seats — while letting major airlines match low headline prices in search results. Crucially, full‑service carriers also bolstered their loyalty machines: larger networks, more generous frequent‑flyer programs, lucrative co‑branded credit cards, corporate contracts, airport lounges and elite‑status benefits. Those incentives push many travelers to stick with a bigger airline even when a ULCC shows a cheaper base fare.
Economists warn that these loyalty systems tilt the playing field. Severin Borenstein of UC Berkeley says rewards and corporate relationships steer customers toward incumbents in ways that price comparisons don’t capture. Small carriers can try to offer loyalty perks, but they lack the scale to make miles and status as valuable or easy to redeem. Partnerships can help but often come with costs or reluctance from larger rivals unwilling to confer legitimacy on struggling airlines.
Costs have also risen in recent years. Energy price spikes after Russia’s invasion of Ukraine and turbulence in the Middle East pushed jet fuel costs up. Labor markets tightened after the pandemic, driving wages and staffing expenses higher — a particular burden for airlines that had positioned pay and staffing as central cost advantages. Because ULCCs operate on very slim margins, these input shocks are especially damaging.
Meanwhile, demand has shifted. Wealthier households, cushioned by asset gains, continued to fly, but many budget‑conscious travelers pulled back as inflation, higher interest rates and softer labor markets squeezed household budgets. Industry analyst Henry Harteveldt notes that even some higher‑earning consumers report cutting back on travel. For occasional flyers — the cohort most likely to shop solely on price — reduced discretionary budgets mean fewer trips taken, which disproportionately hurts carriers that rely on price‑sensitive volume.
Those headwinds help explain why Spirit has been vulnerable. At the time this was written, reports suggested the Trump administration was considering a rescue package of up to $500 million that could give the government a significant ownership stake and possibly pursue a buyer. The possible intervention would be ironic given that the Biden administration’s Department of Justice successfully blocked Spirit’s proposed merger with JetBlue, arguing the deal would harm competition.
Scholars and industry observers disagree on the lessons. Jan Brueckner, an emeritus professor at UC Irvine, says Spirit might have been better off joining a larger carrier, and that losing a ULCC would likely allow incumbents to raise low‑end fares on routes where budget competitors currently operate. Borenstein and others worry consolidation isn’t a cure: fewer independent airlines can mean less competition overall, with ambiguous benefits for consumers.
If Spirit disappears, one clear effect would be fewer ultra‑low‑cost options available at scale. Legacy carriers have already borrowed the tactics that made ULCCs disruptive — unbundled fares and aggressive price matching — while using their size and loyalty engines to blunt competition. Rising costs and a smaller base of bargain‑hunters have tightened the market further. The result: travelers who relied on rock‑bottom fares, however begrudgingly, could find themselves with fewer cheap alternatives even if they never liked the experience.”}