End of an era - Spirit Airlines liquidation is imminent
UPDATE MAY01: It has been confirmed that Spirit Airlines will cease operations tonight. A few pilots and air traffic controllers have started to say their goodbyes on frequency (which is kind of cool, but so bittersweet).
Quite the busy day in the aviation world today...
Multiple reliable sources have reported that Spirit Airlines will reach breaking point in the coming days. Its debts have exceeded profits for a while and it seems the skyrocketing fuel prices are the final nail in the coffin.
Failed Government Intervention
Last week, there were reports of the federal government stepping in for Spirit which will keep it running. The deal was rumored to be structured as a venture buyout, where the federal government will own a majority stake in the airline. That deal has since fallen through.
Personally, I wasn't a fan of this idea anyways. This is way different than the COVID bailout deal, in which airlines used their rewards programs as collateral, thereby making it a form of a loan. Buying up a ~90% stake in an airline basically makes it a "state-run airline", where profits and losses are directly attributed to the government balance sheets. This move would kind of be a step backwards from airline deregulation in 1978.
While I'm not necessarily against the federal government stepping in to help airlines where needed. These should be limited to "weathering the storm", giving airlines just enough to get by and then ultimate return to profitability when the situation clears (think COVID, war, etc). But these airlines should be profitable in the first place.
Spirit has long been hemorrhaging money - with no path to profitability in sight. Even if the government had stepped in, it's hard to see how Spirit wouldn't just burn right through that cash.
Old News...
This is hardly the only time we've seen airlines cease operations in recent decades. Wow Air and PLAY were both Icelandic low-cost carriers that went belly up after just 6-7 years of operations. Czech Airlines ceased operations in 2024 after a nearly 100 year run. Air Berlin went under in 2017 after 39 years.
Some say that Jetblue might be the next one to go, and I don't exactly disagree. Jetblue hasn't been profitable for a long while, losing millions on millions every year. I remember when Jetblue was trying to force a merger with Spirit, which the Biden Administration blocked. In hindsight, Jetblue may have gone bankrupt along with Spirit if the deal did go through.
What's Next?
If you have any flights booked on Spirit, I would strongly urge you to book some backup flights (preferably refundable to at least a travel credit) just in case. The last thing you want to do is try and fight with the hundreds of thousands of other passengers for alternative arrangements.
But in terms of the US travel industry, I forsee fares will rise soon and won't be coming down ever again.
When ultra low-cost carriers entered the market, the larger airlines started to compete with low cost carriers like Spirit, Frontier, and Allegiant by introducing a lower fare case called Basic Economy. These Basic fares come with restrictions similar to flying on Spirit, but you'll still be flying a "big airline". Now with less competition around, these fares are likely only to go up, if not disappear altogether.
With Southwest's hostile takeover by Elliott, fares have gone up pretty dramatically across the board. While in college, I would routinely fly with Southwest because their fares were competitive and the free checked bags benefit. Now, I don't really see competitive pricing anymore out of Boston. Slowly but surely, I think we'll see this trend continue across the board.
United's executives have even admitted that higher fares might be here to stay. Time to start really investing in award travel!