Spirit Airlines exit likely to drive up US airfares, experts warn

The exit of Spirit Airlines is expected to put additional upward pressure on airfares across the United States, according to industry experts, News.Az reports, citing AFP.

Founded in 1992, Spirit was known for its ultra-low-cost “bare-bones” model, which helped expand air travel access to a wider group of passengers who might otherwise have been priced out of flying. Its approach to unbundled fares—charging separately for services such as baggage and onboard amenities—became widely known in the industry as the “Spirit Effect.”

The U.S. Department of Justice previously argued in 2023 that Spirit played a “unique and disruptive role” in the airline market during its attempt to block a merger with JetBlue.

According to the DOJ, when Spirit entered a new route, fares across airlines typically fell and demand increased. The agency also noted that Spirit’s entry into markets was associated with an average 17% drop in prices, while its exit led to roughly a 30% increase in fares.

Spirit ceased operations on May 2, raising concerns that ticket prices could climb further at a time when airfares are already under pressure from rising jet fuel costs linked to the Middle East conflict. The U.S. Department of Transportation reported that jet fuel costs for U.S. airlines surged 56% in March compared with February and were 30% higher year-on-year.

Economists and aviation analysts say the disappearance of Spirit may lead to higher baseline fares, particularly in markets where it previously exerted strong competitive pressure.

Jan Brueckner, an emeritus economics professor at the University of California, Irvine, said airlines are likely to continue offering “basic economy” fares originally designed to compete with Spirit and other budget carriers, though he warned these fares may become less attractive over time.

Aviation analyst Richard Aboulafia of AeroDynamic Advisory said there is “no question” that fares will rise in some markets, given the loss of a major low-cost competitor.

Industry consultant Richard Masler of the Centre for Aviation said Spirit’s long-term role forced airlines to adopt more competitive pricing structures and lower fares.

Following Spirit’s shutdown, other low-cost carriers such as Breeze Airways, Avelo Airlines, and Frontier Airlines have moved to expand service and capture some of its former routes. Frontier Airlines, for example, plans to add new routes and increase departures across former Spirit markets this summer.

Frontier executives said the expansion could significantly boost revenue and capacity as the airline targets demand left behind by Spirit.

Industry experts also noted that Spirit’s presence had previously forced competitors to adjust pricing strategies, helping keep some fares lower than they might otherwise have been.

However, analysts caution that with fewer aggressive low-cost competitors in the market, the cheapest fare options may become harder to find in certain regions, even if overall air travel remains widely accessible.

News.Az 

By Nijat Babayev