LEILA FADEL, HOST:
Spirit Airlines has flown for the last time. The ultralow-cost carrier ceased operations over the weekend after more than 33 years. So what does that mean for the U.S. airline industry, and what happens to Spirit's former customers? NPR transportation correspondent Joel Rose has been following the story and joins us now. Good morning, Joel.
JOEL ROSE, BYLINE: Hey. Good morning.
FADEL: OK. So first of all, what's going to happen to people who had tickets to fly on Spirit?
ROSE: Spirit says the majority of those people who bought a ticket directly from them with a credit or debit card have already been refunded. And 1,500 crew members have been returned to their home bases as of Sunday evening. Of course, those refunds are not going to get you back home if you were stranded when Spirit ceased operations early Saturday morning. Some other airlines are offering special rescue fares, capping their fares for customers who were holding Spirit tickets. Those are only available for a limited time, and the details are going to vary by airline.
FADEL: What's the longer-term impact on the industry likely to be?
ROSE: It could be good for Spirit's competitors. We've already seen one carrier, Jet Blue, announce more flights at Spirit's former hub in Fort Lauderdale, Florida. But there is concern that Spirit's demise will lead to higher fares. Spirit was only the ninth largest carrier in the U.S. by seats, though consumer advocates say that low-cost carriers help to keep prices down on any route they fly because just their very presence in the market forces the bigger airlines to offer more competitive fares. I talked about this with William McGee. He's a senior fellow at the American Economic Liberties Project, which is a left-leaning nonprofit in Washington, D.C.
WILLIAM MCGEE: What a lot of people don't understand is, you do not have to fly a small carrier in order to benefit from its presence because they will bring down the big guys' fares.
ROSE: So now that Spirit is not flying anymore, fares may go up on those routes that it flew, and not just for Spirit's customers but for everyone.
FADEL: So why did Spirit go out of business?
ROSE: It could not overcome this toxic combination of higher fuel costs and deeper problems with its business model. Spirit was a pioneer of the ultralow-cost business model, where airlines keep their fares way down by stripping away the amenities that travelers had previously taken for granted and then charging extra for them. But then the big legacy carriers created their own versions of those basic economy fares, and Spirit had a hard time competing. I talked about this with Shye Gilad. He's a former airline pilot, now professor of management at Georgetown University.
SHYE GILAD: You're a low-cost carrier, by definition, you're relying on having a cost advantage. And they just don't have that anymore.
ROSE: Spirit tried to merge with a bigger airline, Jet Blue, in 2023. But the Department of Justice opposed that merger, and it was blocked in court. Spirit also sought a last-minute bailout from the Trump administration, but no deal materialized.
FADEL: And how much did higher fuel prices contribute to Spirit's demise?
ROSE: The company's CEO says they mattered a lot. CEO Dave Davis talked to The Wall Street Journal after the company ceased operations. Davis said Spirit was trying to emerge from bankruptcy. And he says the company's plan could have worked, but the rising cost of jet fuel forced Spirit to burn through cash faster than expected. And it just ran out of money.
The price of jet fuel in the U.S. has surged about 70% since the beginning of the war with Iran. This is a challenge across the industry. Airlines are trying to pass the costs along to their customers in the forms of higher fares and bag fees. But that may not be enough, especially for other low-cost carriers. In that interview with The Wall Street Journal, Spirit's CEO warned that other airlines could also be in jeopardy because of the high price of jet fuel.
FADEL: NPR's Joel Rose. Thank you, Joel.
ROSE: You're welcome. Transcript provided by NPR, Copyright NPR.
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