The Decline of Spirit Airlines...What Happened??

Added: 2026-05-12

[00:00:07]Spirit Airlines is shutting down. It is almost hard to believe that those signature yellow planes just won't be around anymore. The final Spirit flight flew from Detroit to Dallas, landing just after midnight on May 2nd, likely marking the end of what might be the most infamous airline to ever exist.

[00:00:25]More on that later. But 17,000 people have lost their jobs and tens of thousands of travelers have been left stranded. If you go to their website, you will find an announcement that reads, "It is with great disappointment that on May 2nd, 2026, Spirit Airlines started an orderly windown of our operations effective immediately. To our guests, all flights have been cancelled and customer service is no longer available. We are proud of the impact of our ultra lowcost model on the industry over the last 33 years and had hoped to serve our guests for many years to come.

[00:00:57]Not incredibly surprising to anybody who has been following the state of the company considering they filed for bankruptcy in November of 2024 that was followed by a second bankruptcy less than one year later. Obviously, those are troubling signs, but still companies are often able to recover from bankruptcies, especially in the airline industry. Three of the big four US airlines, Delta, American, and United, have recovered from bankruptcies in the past. In fact, the last major US airline to completely shut down like this was midway on the day after the 9/11 terrorist attacks almost 25 years ago.

[00:01:35]So, when you look at it that way, something unusual is happening here. We are witnessing history. Spirit is going to be frozen in time and become one of those things that make us think about this era. A lot of people have been requesting that I make this video trying to explain the unique situation. There have been more suggestions for this topic than anything else I can remember for a long time. So, for today, I want to deliver by outlining what I believe to be five of the biggest reasons behind the collapse of Spirit Airlines.

[00:02:04]Starting out with the most obvious reason everybody here is thinking it, a negative reputation. And what else can I possibly say here that has not been said a million times already? Spirit receives an abnormally high rate of complaints from customers and the American customer satisfaction index typically ranks them dead last among other major airlines. As you might expect with ratings like that, they become the subject of numerous jokes either from late night comedians or people having fun on the internet.

[00:02:31]Seriously, just go down to the comment section and you will see what I'm talking about. In 2022, I even made a video focusing on why they are so hated.

[00:02:39]So, I recommend that video if you want to hear more details. But here's a quick summary. See, the company has roots going back to the 1960s as a trucking operation, evolved into a small airline in the 1990s, but failed to gain much traction until the mid 2000s when Ben Baldanza became CEO and unapologetically started implementing a low price strategy. It was in a major way. Their business model became centered around extremely low ticket prices made possible mostly by unbundling everything that people used to expect to automatically come with their ticket. Do you know what I mean? The ticket itself would be attractively cheap. But if you want to pick your seed, order any food or beverages, bring a carry-on bag, anything along those lines, it would cost extra, allowing customers to pay for only what they want, which is cool, but at the same time providing a very basic and often uncomfortable flight. I would argue that this strategy is the single greatest reason behind their success and their failure. It practically changed the way pricing works throughout the industry, leading me to the next reason behind their failure. Tough competition. 20 years ago, Spirit was doing things that were practically unheard of. For example, in 2007, they were the first US airline to charge a fee for checking a bag that has since become the new standard. They essentially exposed the demand for this type of pricing that has since been adopted by larger, more powerful airlines in a less aggressive way. In 2012, Delta started offering basic economy airfares, now called Delta Main Basic, which they say offers you lower prices with limited flexibility and is best for those who aren't concerned with benefits like seat selection, same day changes or upgrades. It was essentially created to compete directly against the ultra- lowcost carriers that were gaining traction at the time, mainly Spirit. Then in 2017, 5 years later, United and American started offering something similar, which happened to be the same year Delta announced that they would be expanding their offerings globally. So to put it simple, something that used to be unique to Spirit can now be found at many other airlines, most of which have significantly better reputations. Spirit has been known to fit as many seats on their planes as possible, so if you place a high value on legroom, you might want to explore those other options. I think it has gotten to a point where people just avoid spirit in favor of any other comparable offer. My next reason on the list is going to be a quick one. The pandemic. And I'm not saying anything revolutionary here. Lockdowns, restrictions, and an overall fear of spreading the virus led to a drastic drop in travel, which was bad for all the airlines. But Spirit really had a hard time recovering. Their income turned into losses in 2020 that have since totaled almost $6 billion. If you had invested $100 in Spirit at the end of 2019, shortly before the start of the pandemic, it would have been down to less than $1 5 years later, which is not only worse than the rest of the stock market, but worse than the rest of their industry. And of course, a lot of it does have to do with the reasons I already mentioned, but the situation has been complicated by unexpected extra costs, which is the next reason on my list. Due to engine issues, dozens of their planes had to be grounded for extended periods for inspections and repairs, which has impacted their revenue, their efficiency, and is commonly cited as a factor behind their bankruptcies. Their cost of labor has been rising, a lot of it stemming from the industry-wide shortage of pilots.

[00:06:08]Fuel costs have just about doubled in the months following the start of the war with Iran. They say it added $100 million in incremental costs in March and April alone, which they believe is the most immediate reason behind their recent shutdown. By the way, fuel and labor have traditionally been the most expensive parts of keeping the business running, combining for about 55% of their operational costs in 2025. So, when your biggest expenses become even bigger, that can be an issue and make it difficult to turn a profit, which is what we have been seeing. At that point, you almost have to borrow money to cover these costs, which leads to more costs in the form of interest expense, which can be a lot to overcome for a company with a reputation like this that many people have been aggressively avoiding.

[00:06:54]Remember, Spirit is known for low prices. That is about what they have to offer. And if their expenses become too high to be able to deliver that, well, there is just not much of a business there anymore. Also, inflation has left people with less money to spend on fun activities like vacations. And since Spirit relies heavily on people traveling for leisure, this has been yet another issue for them. People traveling for work tend to use bigger airlines that have more attractive loyalty programs for frequent flyers, leaving Spirit more reliant on a group of people that are simply not traveling as much right now. Going back to the list, my final reason behind the collapse of Spirit Airlines is multiple rescue attempts. In 2022, there were months of negotiations for Spirit to be acquired by Frontier Airlines, which at least on the surface seemed like a promising deal, joining together two of the biggest ultra lowcost carriers in the US. Frontier is from Denver, whereas Spirit is from Florida. So, it would have joined the East and West operations under one company. On top of that, the CEO of Frontier at the time was Barry Biffle, who had previously spent eight years as the chief operating officer over at Spirit. Today, he believes that the merger would have saved the company, and I think most would have to agree with that. However, the shareholders of Spirit voted against the deal because there was a more attractive offer on the table. Frontier was offering a cash and stock deal worth around $2.8 billion when JetBlue came in with an offer worth around3.6 6 billion. So, here we have yet another deal that would have likely saved spirit that also failed to happen.

[00:08:30]This one was challenged by the Department of Justice as part of the antirust crackdown from the Biden administration. I want to point out that as of 2026, Spirit only holds about a 3 to 4% share of the market. So, either one of these mergers would have created a company maybe about half the size of the big four. It was ultimately blocked by a federal judge that feared JetBlue would not continue operating as an ultra- lowcost carrier, and I guess that would reduce competition in that segment. It is a controversial decision, especially now. At the time he made the statement, Spirit is a small airline, but there are those who love it. To those dedicated customers of Spirit, this one's for you. Yeah, that is such a silly statement looking back because blocking that merger almost certainly hurt Spirit more than allowing it would have. The company stock lost almost half its value following that decision. And that is where things really started falling apart. More recently, there have been discussions of a government bailout where the US government would potentially provide $500 million in exchange for up to 90% of the company.

[00:09:34]But this was really more of a lastminute hail Mary type effort. I guess the Trump administration was insisting that the government would have the first claim to Spirit's assets if they were to fail, and the investors did not agree with that. So it turned out to be yet another deal that never happened. If you have been counting, that is three attempts to save the company that failed for different reasons. If any one of them had gone through, people would probably still be flying on Spirit planes right now. To summarize the situation, these last five or six years have been really unfortunate for Spirit. A lot of it has been their fault, but a lot of it has been beyond their control. You have to admit they have been dealing with a lot of issues that keep piling on top of each other until it became too overwhelming to control. Ultimately, I doubt many people not directly connected to the company have been broken up about this. But my guess is that the memory of Spirit will become more positive as time goes on. I'll bet you that there will be a day when pictures of those yellow planes make us nostalgic for this time period and they will be remembered for the changes that they sparked in the industry. Or maybe not. I don't know. I just think there's some stuff to respect here and I just hope it doesn't go completely overlooked. Let me know in the comments what are your thoughts about Spirit. Are you happy to see them go or are you going to miss having them as a lowp price option? Do you have any experiences that you would like to share, positive or negative, with one of their flights, or have you just completely avoided them? And finally, what do you see for the future? Will the Spirit name live on in some shape or form? Or is this truly the end of it?

[00:11:02]And any other thoughts you have about Spirit Airlines, leave them in the comments. I'd like to hear what you have to say. Thank you for watching.