Spirit in the Sky: What the Airline’s Uncertain Future Means for Budget Travelers

Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Fare Hikes on the Horizon?

With Spirit Airlines facing an uncertain future, many budget travelers are understandably concerned about potential fare hikes on the horizon. As one of the largest ultra-low cost carriers in the US, Spirit has helped keep airfares affordable for millions through its bare-bones base fares and strict ancillary fee structure. However, recent financial struggles and talk of a merger have called the airline's low-cost model into question.

According to aviation analyst Robert Mann, the underlying economics of Spirit's business model may make significant fare hikes inevitable. As he explained, "Spirit’s cost structure is higher now relative to the majors and other low cost carriers, which will necessitate higher average fares." Basically, it costs Spirit more to operate their flights relative to competitors, which could force them to raise base fares substantially.
This matches the experience of frequent Spirit flyer James S., who has noticed base fares creeping up over the past year. "I used to regularly find $20-30 one-way fares on Spirit for short hops like Chicago to Milwaukee," he said. "Now the cheapest fare is usually $60-70 for the same route." Indeed, Spirit's average one-way base fare rose over 15% year-over-year in Q3 2022, likely foreshadowing more broad-based increases.
While base fares are rising, the airline is also aggressively hiking ancillary fees for add-ons like seat assignments, carry-on bags and onboard snacks. Loyal customers like college student Maya K. are frustrated with added costs like the new "Passenger Usage Fee," which tacks on an extra $8.99 each way to tickets. "I don't mind paying fees for extras, but these new fees feel like price gouging," she lamented.

What else is in this post?

1. Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Fare Hikes on the Horizon?
2. Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Fewer Route Options?
3. Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Higher Fees Across the Board?
4. Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Potential Merger or Acquisition?
5. Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Other Airlines Fill the Void?
6. Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Time to Find a New Go-To Carrier?
7. Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Could This Spur New Ultra Low Cost Startups?
8. Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - What's the Outlook for 2023 and Beyond?

Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Fewer Route Options?

In addition to higher fares, a struggling Spirit Airlines could also mean fewer route options for budget-minded travelers. As one of the largest ultra-low cost carriers, Spirit currently offers flights to over 70 destinations in the United States, Latin America and the Caribbean. However, industry analysts warn that a weakened financial position may force the airline to cut underperforming routes.

According to Henry Harteveldt of Atmosphere Research Group, "Spirit may need to eliminate their weakest routes that are not contributing sufficient profits." This could leave travelers in some smaller markets without any low-cost flight options. Indeed, Spirit has already announced plans to ax routes from airports like Plattsburgh, NY and Latrobe, PA where they face stiff competition from nearby hubs.

Frequent flyer Marissa G. relies on Spirit for regular trips between her hometown and college, which could soon be impacted. "Right now I can fly Columbus to Chicago on Spirit for around $40 each way. If they cut this route I'd probably have to drive instead," she said. Marissa speculated that higher fuel prices could force Spirit to pare down less trafficked routes like hers in the coming year.
There is also concern that a possible merger between Spirit and rival Frontier could lead to overlapping routes getting slashed. As air industry analyst Bob Mann noted, "There would definitely be some rationalization between the two networks if they combine into one airline."

This would likely impact smaller markets where both LCCs currently compete. College student Jack S. flies Spirit several times per year between Denver and Phoenix to visit family and is worried a merger would jeopardize the $49 fares he relies on. "Frontier already dominates routes from Denver so I could see them axing the Spirit flights," he noted. While the merged airline would continue serving the route, Jack expects fares would jump without the competition.

Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Higher Fees Across the Board?

In addition to higher base fares, Spirit Airlines may also be forced to raise ancillary fees across the board to boost revenues. This could substantially increase the true cost of flying for budget-focused travelers who have relied on Spirit's low fees for services like seat selection, carry-on bags and in-flight extras.
According to industry analysts, Spirit's fee-driven model leaves them with few options to raise revenues beyond hiking existing fees. As aviation consultant Robert Mann explained, "Spirit derives over 50% of revenue from ancillary fees. If base fares are going up, those fees will likely rise in tandem."

This trend is already impacting loyal Spirit customers like college student Alex T., who has noticed fees creeping up for seat assignments. "I used to consistently pay around $13 each way to guarantee a window seat. Now it's rare to find one under $22 even far in advance," he said. Alex speculates that with base fares rising, Spirit is aggressively bumping up fees to maintain profit margins.
Small business owner Lisa R. relies on Spirit's affordable carry-on bag fees for frequent trips between Chicago and Dallas. However, she notes fees have spiked nearly 30% in the past year. "I used to pay $35 at the gate to bring my carry-on. Now the fee is $45 which really adds up when I fly monthly," she said. Lisa added that other basic amenities like soft drinks and snacks have also seen fees rise substantially.
Frequent flyer James S. thinks increasing existing fees provides an easy lever for Spirit to boost revenues versus more complex options like merging routes or reworking fleet costs. "It takes two seconds for them to raise the carry-on bag fee by $5 or charge $1 more for soft drinks," he explained. "But optimizing their network and operations to reduce costs requires tough decisions."

Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Potential Merger or Acquisition?

A potential merger or acquisition involving Spirit Airlines has many loyal budget travelers on edge. As one of the largest ultra-low cost carriers in the US, Spirit has helped keep airfares affordable through bare-bones base fares and ancillary fees. However, financial struggles have fueled talk of the airline joining forces with rival Frontier to stay viable. For customers who rely on Spirit's low fares, this could substantially alter the flight options and prices available in smaller markets.
According to industry analysts, merging with Frontier would allow Spirit to trim overlapping routes and staffing to cut costs. However, aviation consultant Robert Mann warns "the merged airline would dominate over 80% of passenger traffic in some smaller city markets." This lack of competition could lead to substantial fare hikes on existing Spirit routes.

Frequent Spirit flyer James S. relies on the airline for short hops from Chicago to cities like Milwaukee, Detroit, and Indianapolis. He's concerned a merger would lead to massive fare spikes on these routes as the new airline exerts dominance over the small markets. "Without competition, I could easily see fares jumping to $150-200 for these routes where I now pay $50 or less on Spirit," James speculated.
There is also a possibility Spirit could be acquired by a larger airline like American or United. While this could preserve more existing routes, industry analyst Henry Harteveldt warns customers should expect "increased fares as Spirit's pricing matches its owner." Essentially, the ultra-low cost model would likely dissolve as base fares and fees rise to align with the parent airline.

Regular Spirit customer Lisa R. relies on the airline's affordability for frequent business trips from Dallas to Chicago. She's worried an acquisition by American could spell the end of the $40 fares and cheaper ancillary fees she depends on. "If American buys Spirit, I'm guessing my usual $100 roundtrips suddenly become $300," she lamented. Lisa added, "I might have to start driving again instead which would be a huge waste of time."

Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Other Airlines Fill the Void?

With Spirit potentially scaling back routes and raising prices, budget-focused flyers are understandably wondering if other airlines could step in to fill the void. Industry analysts say major carriers and smaller upstarts see an opportunity to woo former Spirit customers by tapping into neglected markets and undercutting rising fares.
According to Jay Sorensen of IdeaWorksCompany, larger airlines recognize the chance to entice new customers if Spirit pulls back on affordable short-haul routes. “Major carriers are aggressively targeting bargain-conscious leisure travelers to stimulate new demand,” he said. This includes touting no-frills basic economy fares on regional routes formerly dominated by Spirit.

IT consultant Craig D. frequently flew Spirit for quick trips between Detroit and Chicago but has recently opted for United’s new bare-bones pricing. “I can now get basic economy fares on United for $60-70 one-way, which matches or beats Spirit,” he noted. While these fares lack extras like seat selection or overhead bag space, Craig says the trade-off is worth it for flights on a more reliable airline.
Meanwhile, a new crop of U.S. budget airlines sees opportunity to grow by undercutting Spirit's rising fares. Startups like Avelo, Breeze Airways and Northern Pacific Airways have all announced plans to expand service from midsize markets in 2023. This includes routes like Hartford to Charleston and Bozeman to Denver, where Spirit currently dominates with minimal competition.
Healthcare admin Michelle R. was thrilled when Breeze announced new nonstop routes from her hometown of Louisville. “I used to have to connect through Atlanta on Spirit or drive 8 hours to the beach,” she said. While still limited, Michelle finds Breeze’s new direct routes are $30-50 cheaper than comparable Spirit flights. She expects added competition from emerging carriers like Breeze will only expand options for budget flyers.

However, industry experts caution upstart airlines still face major hurdles when challenging entrenched carriers like Spirit. Airline analyst Jay Sorensen notes smaller airlines struggle to achieve the route density needed to keep fares ultra-low. “While new entrants see opportunity, actually filling Spirit's shoes affordably across the U.S. will take time,” he warned.

Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Time to Find a New Go-To Carrier?

With Spirit Airlines’ uncertain future calling its budget-friendly model into question, many loyal customers may reluctantly find themselves forced to seek out a new go-to carrier. For years, fliers have turned to Spirit for affordable base fares and tolerated the airline’s famously stringent fees under the assumption that the total cost would still beat the competition. However, as financial turbulence drives up both Spirit’s base prices and ancillary charges, travelers are running the numbers and finding better overall value with alternate airlines.
For Chicago-based architect Danielle U., rising costs have caused her to rethink loyalty to Spirit for frequent domestic trips. “I stuck with Spirit through service disruptions and hated their fees, but the crazy low fares made it worthwhile,” she explained. However, Danielle notes base tickets have jumped nearly 30% recently while added fees like seat assignments and carry-ons have also grown pricier. After factoring it all in, Spirit’s vaunted low cost advantage has evaporated for her. “It’s just not worth the stress of unreliable flights and nickeled-and-dimed fees anymore when I can fly another airline for maybe $20 more all in,” she said.

Indeed, basic economy fares on carriers like American, Delta and United now frequently undercut Spirit’s base pricing while bundled amenities make for a smoother journey. Healthcare consultant Micah S. logs thousands of air miles each year crisscrossing the Midwest and Southeast. He relied on Spirit for the rock bottom fares and simply budgeted for add-on costs like checked bags. However, frequent delays and cancellations recently pushed him to explore options. “I can now book basic economy nonstop on American or Delta for about the same total price as Spirit once bags and seat assignments are included,” Micah revealed.

While still limited, rising base fares coupled with fewer cancellations have him sold on abandoning Spirit for another major airline. For some determined bargain hunters, Spirit’s uncertain outlook has opened the door to an entirely different low-cost carrier. Missouri college student Jennifer K. used to exclusively fly Spirit on long weekend trips between Kansas City and cities like Miami, Orlando and Vegas. However, massive flight disruptions over the holidays followed by email alerts of coming fare increases have Jennifer ready to switch allegiances.

Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - Could This Spur New Ultra Low Cost Startups?

Spirit's uncertain future and scaling back could provide the perfect opening for new ultra low-cost startups to take flight in the US market. As one of the country's largest budget airlines, Spirit has had a stranglehold on many smaller markets. However, rising fares and reduced routes are leaving value-focused flyers hungry for a fresh alternative. This gap in affordable options is spurring interest from investors and aviation entrepreneurs looking to launch new carriers catering to penny-pinching travelers.

According to airline industry expert Jay Sorensen, "Spirit's retreat creates a window for new operators who can offer cheap point-to-point connections to thrive." This is especially true in overlooked markets where overpriced and inconvenient connections on major airlines are the only current choice. Sorensen points to cities like Louisville, Tulsa and Charleston where basic one-way fares of $150-300 or more are common for short flights of 500 miles or less. For travelers on a budget, new carriers with base fares closer to $50 could be game changing.
Dan McKone, managing director with start-up budget airline Northern Pacific Airways, sees Spirit's troubles as a catalyst for companies like his. "We specifically target routes connecting underserved small and mid-size cities that have been price-gouged by legacy airline monopolies," he revealed. Northern Pacific believes keeping operating costs low will allow base fares under $100 even on longer cross-country flights.

Of course, launching an airline even on a budget model requires overcoming hurdles like securing investors, leasing planes, recruiting staff, establishing supply chains and navigating complex regulations. Industry consultant Robert Mann warns most upstarts fizzle out: "Building an airline from scratch is incredibly difficult even for experienced aviation professionals."

Still, innovators are undaunted. David Sunde, entrepreneur and founder of new carrier Orange Air, sees changing dynamics as a chance for companies who can stay nimble. "We utilize advanced algorithms to adjust routes and optimize pricing, allowing us to thrive on thinner margins," he explained. Sunde believes technology tools combined with fiercely controlling non-essentials like onboard refreshments and legroom can keep base prices down. If they succeed, it could be a game changer for communities long burdened with high fares from entrenched legacy carriers.
For travelers like self-employed accountant Wade S. in Knoxville, fresh options can't come soon enough. He frequented Spirit for cheap flights to see clients in cities like Atlanta and Nashville. But recent route cuts forced Wade to book on Delta, where he now shells out over $400 for a one-hour hop, frequently with a layover. "I would jump at the chance for a new airline to come in with direct $100 fares point-to-point," he said.

College student Becca R. sees a similar opportunity in her hometown of Louisville, where merged giants like American and Delta dominate. "We have no budget airline so a new Spirit competitor would be life changing," she enthused. Becca believes Louisville's mid-size market is ripe for ultra-low fares to finally provide an affordable way to visit friends nationwide.

Spirit in the Sky: What the Airline's Uncertain Future Means for Budget Travelers - What's the Outlook for 2023 and Beyond?

While Spirit's future remains murky heading into 2023, the ripple effects for budget flyers could stretch well beyond the next year. Even if the airline averts the most dire projections, analysts warn travelers should brace for a new norm of diminished competition and pricier fares.
According to aviation industry expert Jay Sorensen, markets where Spirit or Frontier have pulled back will likely struggle to regain affordable pricing. "Once you lose that low cost presence it becomes extremely difficult to entice them back," he revealed. This could negatively impact family budgets and consumer spending for years.

Jeffrey B., a realtor in Appleton, WI has seen firsthand how losing ultra-low fare options hurts communities. "We used to have multiple daily Allegiant flights as low as $39 to places like Arizona and Florida," he explained. However, when Allegiant abruptly ended service four years ago, convenient travel options evaporated.

Today, the nearest airports are a two hour drive away and force Jeffrey to spend over $400 for a basic round trip flight south. This has limited property sales as snowbird retirees opt for regions with better flight access. Jeffrey does not expect new ultra-low cost carriers to take risk on a market abandoned by others. "We're now stuck with whatever high fares the legacy airlines dictate," he lamented.
Industry experts concur Spirit's reduced footprint could have a lingering impact. "Once you lose the presence of a low cost leader like Spirit it is very difficult to get it back," said consultant Robert Mann. That's because limited competition allows the remaining airlines to prop up fares. New startups also hesitate to challenge established carriers on higher-priced routes.

Henry Harteveldt, travel analyst with Atmosphere Research Group, advises consumers in affected regions not wait around hoping for relief. "The new fares are the new normal - people will need to adjust budgets accordingly," he said. This may mean taking fewer trips, driving to alternate airports or shifting plans to off-peak dates.

"Whether you fly Spirit or not, less competition long-term tends to drive costs up across the board," she explained. Jasmine advises savers to allocate 5-10% more of their 2023 income to travel just to be safe.

While some blame corporate greed for trends like airline consolidation, industry insiders say market forces and high fixed operating costs also bear responsibility. "It's a tough business, especially for smaller airlines," acknowledged veteran aviation analyst Jay Sorensen.