RIP Spirit Airlines

The episode of Today Explained examines the collapse of Spirit Airlines, once a symbol of ultra-low-cost air travel in the U.S., now shuttered after a series of financial struggles and bankruptcy filings. Host Noelle King and guest John Ostrower, editor-in-chief of Air Current, trace Spirit’s downfall to a perfect storm: rising fuel costs, the post-pandemic economic shift, and the erosion of its competitive edge as major airlines adopted its basic economy model. Despite a failed merger with JetBlue blocked by the Biden administration, Spirit attempted a turnaround by upgrading to newer, more fuel-efficient engines—but those proved unreliable and costly. The war in Iran and the closure of the Strait of Hormuz further strained operations. The episode also explores the idea of a government bailout, with economist Deborah Lucas of MIT Sloan arguing that bailing out a chronically unprofitable company like Spirit would be economically unjustified and could create dangerous moral hazard. The collapse marks the end of an era for deep discount air travel in America, signaling a future of higher fares and reduced competition. Key takeaways include: 1) The rise of major airlines adopting Spirit’s low-cost model eroded its market advantage; 2) High fuel prices and unreliable new engines crippled Spirit’s recovery plan; 3) Government bailouts for failing private companies often benefit creditors more than workers; 4) The end of ultra-low-cost carriers may lead to higher airfares across the board; 5) Competition is essential for keeping prices low, even if a carrier is small. The tone is reflective and cautionary, with a mix of nostalgia for Spirit’s affordability and sober recognition of market realities.