Opinion: Spirit Was Hamstrung By Government Decisions

The sad story of Spirit Airlines spiraling from successful air transport innovator to one that ran out of money and ceased operations is in part a tale of being slammed by two governments.

Florida-based Spirit pioneered the ULCC model in the US 33 years ago, essentially following the template established by Ireland-based Ryanair that launched eight years earlier. Keep fares, and even more importantly costs, ultra-low; operate point-to-point service; simplify everything; and charge fees, known as ancillaries, for anything beyond being transported from A to B, including bags, snacks, beverages (including water), and a confirmed seat assignment.

Spirit was relentlessly attacked by lawmakers, the media and passengers for its “lack of service” and those fees. But it stuck to its guns and the passengers kept returning.

Some of the majors tried to respond by launching their own LCC “airline within an airline,” typically with a silly name like Delta Air Lines’ Song and United Airlines’ Ted, and stripped-down service. But the costs of those “budget” carriers remained stubbornly high, and they did not last long. Over time, however, the majors found better ways to compete with Spirit and other LCCs, like Denver-based Frontier Airlines, that were cropping up across the country. First, they got bigger and grew market share through mergers and acquisitions. They reduced services to drive down costs. Then they introduced ancillaries for bags, seat assignments and snacks. Finally, they segmented their economy cabins with new names like “basic economy,” “main cabin plus” and “premium economy” that either provided no extras beyond the flight or packaged amenities into the ticket like earlier boarding, more leg room, an alcoholic beverage and the ability to change schedules. After that, it was much harder for Spirit to compete as Americans reverted to building miles with their preferred airline.

Spirit never really worked out how to counter-attack. Spirit’s costs grew, but its offering had become almost standard across all US carriers.

A proposed $3.8 billion merger with New York-based JetBlue Airways initiated in 2022 could have given each airline additional size against the consolidated majors, which had become increasingly essential for Spirit. The merged airline would still have been far below the majors in terms of domestic market share, but its ability to compete would have improved. A short-sighted Biden-era Department of Justice and federal judge thought otherwise and killed the plan, arguing it would reduce LCC competition. The merger was called off and Spirit entered Chapter 11 bankruptcy soon after, in 2024. So much for “saving” LCC competition.

Spirit emerged from Chapter 11 briefly but failed to get a handle on costs and still did not have anything new and innovative to offer. It returned to Chapter 11 in August 2025, where it remained until ceasing operations in the early hours of May 2.

By then, the second government hammer blow had struck. Though less direct than the impact of the Biden administration, President Donald Trump’s decision to start a war with Iran in February, and the subsequent and ongoing closure of the Strait of Hormuz, raised jet fuel prices to an extent that Spirit could not cope. The airline appealed to the White House for a $500 million rescue package, which was considered, but no deal was reached. Spirit Holdings shareholders were leery because it would have put them behind the government in terms of cash dispersal in the event of the airline still having to liquify. But it was never really a good idea—more a desperate one that might have bought Spirit a bit more time.

All airlines are struggling with the much higher jet fuel prices, but air travel demand remains strong. Airline managers must work through this crisis.

Even so, the US might not have lost a safe, low-fares airline competitor had different decisions been made by successive governments.