Tucked in the far corner of Terminal 3 at Chicago’s O’Hare airport, mostly unseen by business travelers, are the counters for Spirit Airlines, an ultra-low-cost airline that in 2010 became notorious as the first U.S. carrier to charge passengers for carry-on bags. Few things at ORD are as painful as Spirit’s torturous sizers and, if you watch TikTok, you’ll know that Spirit and its oft-harried customers don’t always keep their calm.
But whatever the airline on which you travel, Chicago passengers need Spirit to stay in business.
Simply put, competition from Spirit lowers fares at O’Hare to prominent business and leisure destinations like New York City, Dallas and Las Vegas on carriers like United Airlines and American Airlines. Many ULCCs, as they are called, avoid competing head-on with the majors, so airlines like Allegiant or Frontier mostly fly quixotic routes to underserved airports. But Spirit flies many of the same routes as the big guys and its competitors have to match its prices, at least for some fares. They’ve also copied many of its charges.
Spirit filed for Chapter 11 bankruptcy protection Monday and, even as it did so, CEO Ted Christie put out a memo insisting that everything would remain the same for travelers, positioning Chapter 11 as a positive step and never once typing the work “bankruptcy.” And, indeed, the carrier remains in the air. But anyone who has been involved with a company in Chapter 11 knows that it rarely ends up as simple as that.
Spirit’s financial woes are rooted in several factors post-pandemic, but the largest include a lack of affection on the part of its customers, always tricky to surmount. As important, major carriers have become more sophisticated in strategically matching Spirit’s fares by segmenting their own offerings to include a pared-down Basic Economy and the like, dramatically undermining Spirit’s price advantage. In essence, all U.S. airlines, including the once-affordable Southwest, have become like each other, and that often left Spirit mostly unloved and insufficiently competitive. But if it went away, fares still would immediately rise.
Flyers would have been best served by a merger between Frontier and Spirit, both ULCC birds of a feather that needed to grow to compete. That’s what the two airlines had planned to do in 2022, but then JetBlue swooped in with a higher offer, only for the Department of Justice in one of its numerous overreaches to persuade a federal judge that such a merger would hurt competition and lead to higher fares. Stockholders in Spirit, likely to be wiped out now, would certainly disagree. If there is hard-to-dispute evidence of Justice getting an antitrust ruling wrong, it’s when a party to a potential merger Justice blocked then winds up in Chapter 11. The reality is that bad mistakes were made years ago when United, Delta and American were allowed to gobble up major rivals like Northwest, TWA and Continental. These days, United, American, Delta and Southwest rule the skies; smaller carriers now have to be allowed to merge to provide for heftier price competition. In the case of Spirit, a federal judge erred badly.
Let’s also note that airfares in America are much too high overall, especially for short trips. Just check the fares for Thanksgiving and Christmas. They price many people out of the market entirely.
Europe, thanks mostly to the size and ruthless efficiency of the budget Irish carrier Ryanair, offers far cheaper travel. By contrast, plenty of forces on this side of the Atlantic, including restrictions on foreign ownership, have joined to keep airfares unaffordable for too many Americans.
So even if you never plan to board one of their garish yellow jets, you want Spirit to stay right there in Chicago O’Hare’s Terminal 3, L concourse, doing its thing in the corner. Otherwise, alongside those fancy new airport terminals, we’ll be getting even higher fares.
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