How ultra low-cost carriers like Spirit lost customers to the major airlines

This story was updated on May 2, 2026.

Spirit Airlines, which had been in business for over 30 years, is officially shuttering its operations after bailout talks with the Trump administration broke down.

Spirit's website states that all flights have been canceled and customer service will no longer be available.

The ultra low-cost airline had been beleaguered by high fuel costs, like other airlines, but the company faced a host of issues going back more than a decade. Some of Spirit’s issues were unique to the airline, but there are also structural issues with ultra low-cost carriers, said Robert Mann, an independent airline industry analyst.

Over the past 15 years, major airlines have rolled out cheap travel options to compete with them.

In 2012, Delta became the first U.S. airline to introduce basic economy, which allowed customers to buy cheaper tickets with the caveat that there’d be restrictions on refunds and seat selection. Other major airlines eventually followed suit by establishing their version of basic economy, Mann said.

United had software that would allocate enough basic economy seats to attract budget-conscious consumers without displacing the people willing to pay higher fares, said Henry Harteveldt, airline industry analyst at Atmosphere Research Group.

Major airlines have also expanded their fleets, increasing the amount of economy and basic economy seating. That’s prevented ultra low-cost carriers like Spirit and Frontier from picking up customers who couldn’t find seats on those airlines, Mann explained.

Even if the major airlines haven’t always gone “penny for penny” on price with the budget airlines, they’ve been able to promote various benefits on their carriers, like more frequent flights and complementary snacks and drinks, Harteveldt said.

Spirit and Frontier have big airplanes to keep unit costs down, but as they began having trouble filling up their planes, it wasn’t cost efficient to fly in certain markets, Mann explained.

On top of that, airlines Delta, American, Southwest and United approved contracts in 2023 that raised pilot pay.

Both Spirit and Frontier lost pilots, which forced them to “absorb the costs of recruiting, hiring and, mostly, training,” Mann said. Then, they had to increase pay to compete with the larger carriers, Mann explained.

These major airlines also have diverse revenue sources and loyalty programs, making it difficult for ultra low-cost carriers to compete, Mann added.

Spirit specifically has faced challenges unique to the airline. In recent years, the carrier had to take out many of its airplanes out of service because their engines had defects, Mann said.

The carrier then had to cut capacity, which raised the unit costs or cost per seat. The company furloughed its pilots in response, and then reversed its decision because pilots were leaving faster than they could be furloughed, Mann said.

Spirit eventually filed for bankruptcy in 2024, then filed for bankruptcy again in 2025.

So is the ultra low-cost model still viable in this environment? Mann said that “there is an almost insatiable demand for low-fare travel.”

But carriers have to keep “relatively low costs” and offer other products that allow them to subsidize low fares, Mann said.