ATW editors discuss the factors behind the failing of Spirit Airlines and how it might change the U.S. airline market.
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Karen Walker (00:10): Hello everyone and thank you for joining us for Window Seat, our Aviation Week air transport podcast. I'm ATW and Aviation Week Air Transport Editor-in-Chief Karen Walker. Welcome on board. Now, early on the morning of May 2nd, US ultra-low-cost carrier Spirit Airlines ceased operations. Florida-based Spirit was in Chapter 11 bankruptcy protection for the second time after a proposed merger with New York-based JetBlue Airways was prevented from going ahead by a Biden-era Justice Department that successfully filed a lawsuit alleging the deal would reduce low-cost competition. But here we are, with one less budget airline in the country and frankly some uncertainty about the future of others. In its final weeks and days, Spirit sought a government loan of $500 million, which it said would help tide it through soaring jet fuel prices since the start of the war in Iran and the closure of the Strait of Hormuz.
(01:10): The White House did look at the request, but no deal was made. President Trump also told the media that he would like to save the airline and he even raised the possibility of buying it himself, but again, there was no follow-up. So sadly, Spirit, which had pioneered the concept of ultra low fares, no frills, and ancillary dependent air travel in America exited the scene after almost 33 years of very safe operation. To discuss the ramifications of all this, I am delighted to be joined by two of my US colleagues and experts and they are ATW and Routes, Senior Editor Aaron Karp, and ATW senior editor, and 2C Media founder Chris Sloan. Aaron and Chris, welcome and thank you so much for joining Window Seat Today. So Chris, can I just start with you please? You knew Spirit and its leadership well. One of the things that has to be said that throughout its existence and particularly at the start, Spirit was constantly mocked and criticized by passengers, lawmakers and the media for its barebone services and of course those ancillary fees and yet passengers kept coming back.
(02:23): So let's start with that. What do you think was the main draw that lent itself to Spirit's early successes?
Chris Sloan (02:31): Well, I mean, it's quite ironic that they succumbed to the laws of the jungle during a fuel crisis because where the big opportunity to rebuild an airline that for the first 15 years was really a non-entity was around 2008 during the global financial crisis and that is when they started testing the idea of ancillary fares. And the first place in market where they really dug deep into that was Latin America and the Caribbean. And they really focused on VFR traffic even more so than leisure traffic and empowering people who could not afford to fly and giving them that ability. And they did in a way by concentrating the Fort Lauderdale hub where it was a nice counter to American because Fort Lauderdale never had any sort of Latin American Caribbean hub like that. And so that was kind of the test case. And so the same way that the high COVID and the hike and what's happened here has kind of been a cudgel and used to their end 15, 16 years ago, that was really the catalyst for them to introduce this new business model here, which as you say, was pioneering in America.
(03:42): But again, we look back at what People Express and American did years and years ago and time moved on, but it was as you exactly nailed it. People would complain and be upset, but there was a bit of a sense of you got what you're paying for. And in the end, it is quite tragic.
Karen Walker (04:03): Yeah, I agree. And I think you've touched on a point there, Chris, is that certainly in those early days they sort of found their niche, they found the markets to be in where they could be successful, where things weren't really happening unless you wanted to pay a lot more money. And I think that lent itself a lot to that early success. And I'd like to talk a little bit later about how I think they lost that edge as things went along. But Aaron, just quickly, can I just, I mean, as I mentioned just now, I mean, what you've got to say is that Spirit had an exemplary safety record. They had a fleet of new clean Airbus A320 family aircraft. So they did well in terms of their operations. They didn't go cheap on that. They bought good aircraft and they paid close attention to those operations.
(05:00): But as I said, eventually, almost all other US carriers were copying Spirit's trademarks selling ancillary products like seat assignments and bag checking. So they adopted their models but to their styles and created segments within segments in their economy cabins. Spirit didn't really respond with new ideas. Do you agree, Aaron?
Aaron Karp (05:23): Yes. Ben Baldanza, who is the former CEO of Spirit and he was there when they were really at their innovative height and was really committed to the ultra low cost model. And what he always said was that he looked at Spirit as a McDonald's in the sky and not a steakhouse and that the passengers knew what they were getting. They weren't expecting a steakhouse and they were getting much lower fares and they could get from point A to point B with a much lower cost. And I think what started happening is the majors essentially started offering a very small table in the corner of the steakhouse for the same price. And a lot of passengers said, "Well, if I can pay the same price and be on Delta and United, why not?" And I think Spirit was in a position where they couldn't lower their fares further because costs had gone up, labor costs in particular had gone up.
(06:17): And so I think they were just kind of stuck. And the other problem they had is that they were competing with the majors on almost every route they were flying with a lot of flights every day. And so it was head to head, no longer a price differentiation. And I just think there wasn't much more they could do. They had done all the innovation. Their model had been copied, as you said, by the majors, folded into the majors offering. And I just think it got to a point where there was nothing left for Spirit to do. And then when you start losing the kind of money they lost, it gives you so little flexibility to do anything except just try and tread water and survive.
Karen Walker (06:58): Right. So Chris, again, picking up on some of those points with Aaron, yes, you got the majors adapting and really competing hard and fast against what Spirit had done. And of course they could also offer their frequent flyer. You'd get their miles if you stayed with your chosen major airline and you had bigger reach, you had global reach with those miles as well. So there was that. But it seems to me that Spirit also lost control of one of the biggest factors of an ultra low cost carrier, which is costs. They just didn't stay as disciplined. So they were not only, for a better way of saying it, not as innovative, but they were not as disciplined. Was that an ability in the recent years to make lack of ability, if you like, to make money and stay in business, was that mostly outside circumstances affecting that, like the JetBlue block and the oil prices, or essentially was it a management failure?
Chris Sloan (08:05): Well, I think it's a great question. Obviously, which Aaron and you both described the last six years, there's been a cost convergence post COVID Scott Kirby driving the narrative that it was a Ponzi scheme and using the misfortunes of COVID as an opportunity for their growth, but this began long before. And I think really the pivotal moment was around 2016 when Ben Baldanza departed and Bob Fornaro came in to run Spirit. He came from AirTran. And the joke was they called Spirit was now Spirit Tran. And what does that mean? Well, Spirit Tran, AirTran was a ULCC, but you remember it had perks. It had XM radio, it had a premium cabin, it had a pretty decent operation. And the notion was that as you just said, it was kind of the butt of late night jokes, but they really started leaning into hiring Disney to invest in the guest and adding spare aircraft, building out a larger NOC and all these things add cost.
(09:11): And then they built a Taj Mahal-like headquarters when it was threatened to move and a true hotel and simulators. And so when I visited Spirit, they had the $9 a square foot corporate headquarters and one executive assistant took care of five people. Their business cards were sponsored by their vendors. I mean, they walked the walk and talked the talk. There was no cleaning service. And so cost creep, that began long before. And yes, what was the result? Well, their NPS scores improved. Their quality control improved the operation except in the recently, I mean remarkably improved, but unfortunately the brand perception did not. And then the world changed. And I think you said right at the smack of it is that they didn't come up with new ideas and the Allegiant, the Sun Country, that kind of innovation evaded Spirit. And so this was on well before COVID and as Ben used to say, all those extras, those things come at a cost and Spirit customers, if they're going to have to pay that, are going to go elsewhere, which they did.
Karen Walker (10:26): I'm glad you mentioned Allegiant Air and Sun Country. They're incredible airlines when it comes to innovation. They just do things completely different. They just work out ... I mean, Sun Country is based in Minneapolis for heaven's sake. It's got Delta right on its doorstep and yet it's very adaptive and very, like I say, innovative about how it makes money and those two airlines are working to come together. So I think that's going to be an incredibly interesting merged airline to watch how they do that. Can I just ask you, Chris, just going back to that proposal where they were seeking a government loan, like I say, like $500 million, do you think that would've been a good idea? Would it have saved the airline?
Chris Sloan (11:15): No, I don't think any of us think that was a good idea. I think that would've triggered all sorts of moral hazard. This was not a company that was too big to fail. Here in Florida, it's obviously a significant impact. We haven't had a loss of jobs in a single swoop like this in recent memory. I think had Ben been alive, I think he would've, and I hate to use the phrase turned over in his grave. I mean, he was capitalism, the rules of the jungle, this is what capitalism is and Spirit, this would've ultimately delayed the inevitable. And all this did was accelerate this as it happened and consolidation and rationalization was always part of the equation. And I even further believe that JetBlue, I think that would've been one plus one equals zero as well. I think you used the phrase, they really had no way out.
(12:09): It seems like it was kind of predestined for years and years ago
Karen Walker (12:15): Aaron, what's your thought on that? I concur with Chris. So I think even if they'd been able to get that through that loan could have come with so many attachments and conditions, et cetera, and it would've just made the rest of the industry rebel and say, "Well, hang on a minute, why not us?" It would've made things very, very complicated. What do you think, Aaron?
Aaron Karp (12:43): Well, we should know the last time Trump got involved in the airline business was the Trump Shuttle that was very short-lived. If people may remember that, that was LaGuardia National Boston came around in 1989, actually had a 40% market share at one point, but quickly ran out of cash. And one of the things that killed it was the price hikes and fuel that accompanied the 1991 Iraq war. Yeah. I think that the problem is here, if you can't adjust to shocks like a fuel shock without going under, then you're not going to be able to survive because the airline business is all about adjusting to things you can't control and it was all about being prepared to adjust to fuel shocks. And so if one fuel shock is going to completely knock you out and I think the fact that they went through bankruptcy twice in such a short period, they came out in late 2024, August 2025 were back in bankruptcy.
(13:43): And if you can't get through bankruptcy, if you can't reorganize through Chapter 11 one time to do it a second time right away is just a sign that you're not a viable company anymore. I think the other thing is it opens up a Pandora's box where if you give one airline a bailout, what about if JetBlue, which has not been doing well, starts losing more money? What if there's another sort of shock then everyone else starts lining up and saying, "Hey, we want a bailout too." And the last example of a bailout was during COVID where everyone got it at the same time. But I think if you start handing it out to one, you start getting other airlines potentially lining up and asking for the same thing. And so I don't think it was a good idea because I don't think it would ultimately save Spirit.
(14:31): I think it would've delayed the inevitable and I think it would've created a messy situation where you could have had the say Department of Transportation involved in the operation of a US airline, which I don't think would be a good idea.
Karen Walker (14:47): Let's look to the future a bit now. Which of the US airlines do you think stand most to benefit from the exit of Spirit, pick up its routes, its traffic, its loyal passengers, and which communities stand to lose most airports or communities? Chris, do you have any thoughts on that?
Chris Sloan (15:11): Well, being a Floridian, or notice I did not say Florida man, let's talk about the impact to Florida. There's been many numbers bandied about 17,000 jobs lost, including contractors, but about 9,000 jobs on staff, 5,000 of those in the state. In Florida, the extremely high cost of living, now we've have a $275 weekly, if you can believe it, unemployment and that only lasts for 12 weeks. So all those people are now on the streets and the prospects for hiring, especially Spirit airline people don't necessarily come from a lot of places. United says they've received 300 applications, but the labor situation, very different. So the economic impact here is that Spirit was a great excellent neighbor in the city commerce and charity, but the amount of jobs and sheer loss of people hit this community in a way dramatically like we haven't seen since Pan Am and Eastern went out of business as an Eastern was the largest employer, private employer since 1991.
(16:22): And we even, I think, seen a destruction of an airline in the United States at this scale of what Spirit was in that many years. From a commercial standpoint, as Marty St. George said, and they said this, they were lining up and clearly ready for this. They said in the earnings call, I think at the last one, they said this is going to be a generational opportunity for a change in Fort Lauderdale and creating this hub. And at 3:10 a.m. on Saturday morning, they had a press release out with 11 new cities expansion. They're picking up the gates and six of those cities are cities that JetBlue hasn't even flown to. So it's not just backfilling and adding capacity. They're adding two new services in Latin America. So JetBlue instantly leaps ahead and becomes the dominant carrier. And what I think the knock-on effect is, it's a lifeline for them because they lost Boston during COVID and let Delta overtake them.
(17:17): JFK, they're not number one in New York and certainly with NEA, that's fallen. And so what they're doing is you're going to see an alignment on this Jet Ford plan. A lot of that capacity goes back into Fort Lauderdale, which Fort Lauderdale probably becomes their most dominant station. And then the second one that people are not talking about, obviously, is Spirit was very, very strong in Puerto Rico and San Juan. So JetBlue consolidates further there. And so I think Fort Lauderdale becomes a lifeline, but it's very interesting to see a lot of people, Avianca and a lot of other carriers respond quickly and you can talk multiple networks, how everybody is licking their chops and picking the carcass up and going in and backfilling in markets like Atlantic City and other places where Spirit out of stronghold. But here in Fort Lauderdale, it's going to be a fascinating change.
(18:09): But I think the biggest airline gainer is JetBlue and then Frontier, but also long-term United. Are they setting the table for Blue Sky to mean something more and that predicated you'll have a ... Kirby kept saying, we're not doing big headache. There's not enough gates there, but you know what? Now they've got Spirit gates and JetBlue gates and a critical mass. So does that open the door for something bigger?
Karen Walker (18:35): Just to clarify, you mentioned obviously Scott Kirby, CEO is at United Airlines and Marty St. George, he's president at JetBlue. Is that correct? Yeah, that's right. He's president at JetBlue. So yeah, we've certainly seen movement fast from JetBlue and JetBlue was already building up Fort Lauderdale before all of this pulling back from out of Miami somewhat. So because of the end of its alliance, Northeast Alliance with American Airlines, which of course hubs at Miami. So it's interesting how all these jigsaw pieces are all playing out right now. And then the other one is Frontier has also announced several routes that had been Spirit routes. And then Frontier, of course, is another ultra low cost carrier also been struggling of late. It's based in Denver. Aaron, what's your thoughts on Frontier? Do they gain from this?
Aaron Karp (19:36): Yeah. Well, their chief commercial officer, Robert Schroeter, the other day said that he expects a 3% to 5% uplift in their revenue per available seat mile going forward and perhaps higher. So that's pretty significant from just a revenue generating standpoint. And I think they are now the last traditional ULCC standing in the United States. You mentioned Sun Country and Allegiant and some newer entrants like Breeze and Avelo, but they're all operating like two, three flights a week on routes and they're often on routes where they're not competing, mostly on routes where they're not competing with the majors. So Frontier's the last really low cost carrier, ultra low cost carrier that's going against the majors in the US. And so they sort of have the field to themselves and they have not been doing too badly financially the last couple years. They lost 137 million in 2025, but actually made 85 million in 2024.
(20:38): And so they've been adjusting their model as well. And I think just getting Spirit off the field I think definitely helps them. And I think they will definitely see a revenue boost from this.
Karen Walker (20:50): One of the things that struck me is that in this consolidated airline world that we have, we've got some very, very big airlines at the top and then there's a big gap once you get past the big four, it's a big gap in terms of literal size network reach and domestic market share to the next tier. So Spirit, it would of course have been bigger if it was JetBlue, but even then the merger airline would've been way smaller than the big ones. Even so, it seems to me that one of the factors here was that it just couldn't attain that size that you sort of have to have in the US these days. So it seems to me that Frontier and JetBlue still have the problem going forward of being like the airline Davids versus the land of Goliaths. So is there any way they can address that, Chris?
Chris Sloan (21:47): I think it's an excellent question. I mean, I don't believe we've seen the last act of this consolidation play. And as we've talked about United, I mean, we know that JetBlue, the words are out there that they've considered looking for merge dance partners, whether that is Southwest, whether that's Alaska, whether that is United and there's already the Blue Sky arrangement. And Frontier, the reality is that one of the big Spirit's, the challenge with the LCC model and now Frontier is going to have to walk this line is that they have to grow to keep those unit costs down. But now you see things, it's obvious Frontier and Spirit both bought these gigantic high density A321s and even JetBlue also, that was a big change that JetBlue to compete with Spirit densified their cabin, but now you have this issue where yes, but your trip costs are lower, your unit costs are lower, or your trip costs are higher, but if you're not filling the planes.
(22:49): And so Frontier, you can see kinks in the armor because they need to grow, but at the same time there's this discount go wild pass. They're throwing a whole lot of these, dumping a whole lot of capacity out there because obviously they can't necessarily fill those gigantic aircraft. So I think that this is going to be an interesting tension is now they've got the field to themselves, but they're doing things that seemingly kind of run counter to what the success has been in LCC. We're going back to some non-peak flying and they've got these expensive aircraft. And so I think there's another way to this. And yeah, I think probably the JetBlue, this is the real opportunity here, but clearly I think there's a lot of eyes looking at them as to JetBlue probably being the one who's most ... I will say one of the big motivations of the Spirit merger, the attempted take in learning about that is it was a lot about network relevancy because one thing Spirit had that nobody ever talks about is it did have a pretty strong point-to-point network and it was also, there was a lot of that in the Heartland.
(24:03): So it was going to provide that kind of national relevancy that they were looking at. So I don't know. I don't know, what do you think?
Karen Walker (24:10): Well, I think you touched on this right at the start of this particular part of the conversation is that I think there's more to come, more to play out in this one way or another. I think Allegiant and Sun will pursue their merger with finesse and a very, very sharp business acumen. Of course, we've also got Alaska and Hawaiian now as well moving. And I just think that therefore if you're not part of this merged group, it's just going to be very tough, which is why I think you'll be seeing the people looking around like, okay, well, what do we do to stay competitive, but still keep being able to grow? As you say, that's the trick, isn't it? Being able to grow but not get your costs out of control. Aaron, do you have any last thoughts on that?
Aaron Karp (25:04): Yeah. Well, I think one thing about JetBlue is they now have $9.3 billion in total debt and they had 4.8 in 2021 now, 9.3 in 2025 and that's a lot of debt for someone to take on in a merger and particularly with the losses that JetBlue has had in recent years. One thing that I would be concerned about from a JetBlue standpoint is that someone may not be interested in them until they can get rid of that debt, which could be ... I don't think they're at this point now, but could be through a Chapter 11 process. So I think that's a real concern if someone's looking at JetBlue right now and they only have about 2.2 billion cash on hand. And so the debt to cash ratio is very high there. And so I think that's a concern for JetBlue Frontier, one thing I was thinking about is that while the Trump Justice Department appears to be friendly towards mergers, if someone were to buy Frontier, particularly major, that would be essentially the end of the ultra low cost sector in the US.
(26:10): And I don't know if that would spook the Justice Department if they would say, "Wow, we would have no ultra low cost carriers in the United States that have sort of a national profile where on a day-to-day basis on a route to route basis, they're competing with the majors." So I do think those two carriers will be looked at by the majors, but I think there are some cautions about both of them that may stop the majors from going through on that.
Karen Walker (26:40): Yeah, which is very ironic, isn't it? It goes right back to what I said right at the beginning that the JetBlue merger Spirit and JetBlue was deemed it would reduce low cost competition and we're sort of getting very close here in the America where there might not be any low cost carriers in there. One last and very quick question for each of you, just a summary as much as you are able to please. In the end, are American air travelers worse off without Spirit?
Chris Sloan (27:17): Yeah, I mean, I think there's no question. I mean, I think the airlines and their competitors are much better off without Spirit, but what Spirit did was that they held a check. And so yes, basic economy is not going anywhere, but the amount of seats on a given mark and a given flight, there'll be probably fewer basic economy seats, particularly in markets. And you've seen it where Spirit does not compete. The Spirit effect was real. And I think perhaps beyond the fares and that standpoint, I think we're all a little worse off because when you lose a disruptor, what did basic economy do? Well, look what that led to basic business class. There's a new model. Well, I don't think that necessarily would've existed. I don't think we would've existed and seen the Frontier doing a premium cabin had Spirit not invented the big front seat by accident.
(28:07): So probably we're all a little bit worse off when a true disruptor and a true innovator and a true low fare operator leaves the market. That's my take.
Karen Walker (28:19): Yeah. Southwest was definitely a disruptor, but in a different way, but it was a disruptor, definitely. It made everybody else think differently. And so was Spirit again in a different way, but it was a disruptor and disruptors tend to work best for the consumer in the end. So I think it's always sad when you see that disappear. Aaron, any quick thoughts from a traveler perspective, passenger perspective, worse
Aaron Karp (28:48): Off
Karen Walker (28:48): Without Spirit?
Aaron Karp (28:49): Well, I think all those innovations Chris was mentioning while they were very innovative or long in the past. And I think while this is obviously terrible for the 17,000 people that lost their jobs was not good for the people whose travel plans were disrupted. Honestly, I don't think with the Spirit that was limping along the last two or three years to have a very weak carrier in the market that was dropping routes left and right, often with little notice that was constantly on the verge of collapsing as it finally did. I don't think at this point that the American public that the travelers are worse off now that Spirit's gone, quite honestly. I think it had long ceased to be a relevant competitor and I don't see the market very different today than it was a week ago when Spirit still existed. Yeah,
Karen Walker (29:43): That's interesting you say that because I mean, I have personally experienced, we've got not far from here, Baltimore, Washington, which of course was an important one for Spirit. And a lot of people had to travel quite a lot further from either Virginia or DC to get to BWI versus Reagan or Dulles, but they did it because of Spirit fares. And I've heard a lot of people say to me because they know what I do for work and they said, "What's happening to Spirit? They're not going to this place anymore, or they've only got one once a day and things." So I think you're right. They were already starting to realize things had changed in terms of what that airline was doing for them.
Aaron Karp (30:25): Yeah. I think it was really to a point where if you booked a ticket on Spirit several months out or even several weeks out, that you couldn't be sure that they would still be operating that route. And you mentioned Baltimore. I know JetBlue is now trying to swoop in there and take that business that Spirit had. But yeah, I just don't see much difference than things were a week ago. I think Spirit was already so weak that they weren't much of a factor in the market anyway. And like I think Chris said earlier, this is just how the market works and Spirit was no longer relevant in the market and that's why we think a bailout wouldn't have worked because it just wasn't there anymore as a reliable and a relevant competitor. So no, I think there's a romantic sense from a business standpoint that Spirit was this real disruptor really changed the American airline business, but that ended long ago.
(31:26): And so I think here we are sitting in 2026, the American traveler, the American airline industry is no worse off, honestly, without Spirit.
Karen Walker (31:35): Thank you, Aaron. And thank you, Chris, as well. A very interesting discussion on a sad situation. So we shall see how things go from here, no doubt. Thank you also to our producers, Andrea Copley-Smith and Cory Hitt, and of course a huge thank you to our listeners. Make sure you don't miss us each week by subscribing to Window Seat on Apple Podcasts or wherever you like to listen. This is Karen Walker disembarking from Window Seat.
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