Around 2am (EDT) today Spirit Airlines ceased operations. All flights from today on have been canceled. Travelers holding tickets arrived at airports this morning to find the desks unstaffed.
The airline was navigating its second bankruptcy filing in two years. It held out hope the past few days that the federal government would bail it out. The Trump administration offered $500 million to pay off creditors— but in exchange demanded up to 90% equity in the company. The deal fell through. (I'm no expert on the specifics of the deal but that 90% equity thing sure seems like a "Fuck you" offer that would never be accepted.)
The most interesting thing to me about Spirit's demise isn't the last-minute government bailout offer, however legit or ludicrous it may have been. Nor is it the situation of stranded travelers, though I sympathize with their plight. (Rival airlines sympathize, too, as they have offered exceptional policies to assist stranded travelers.) What's interesting to me is that Spirit Airlines pioneered a business model the whole industry copied, and it just failed. 😨
Spirit started flying in the early 1990s as a charter service. Several years later it began scheduled service, bringing a new a-la-carte model to air travel in the US. Instead of including a raft of common services with its flight tickets, Spirit "unbundled" things such as checking a bag, choosing a seat, and even handing you a printed boarding pass. These became separate fees travelers had to pay.
Customers were outraged— or, rather, they feigned outrage, because as much as they decried what a hostile new business model this was, they snapped up the cheap tickets like the ignorant fools they are. Spirit made so much money by nickel-and-diming customers that eventually all the other US airlines had to change to compete. Now all the airlines offer "basic economy" tickets designed to look cheap on search engines while delivering extra profit through steep fees for once-assumed things like being able to pick seats at booking so your kids are near you. Even Southwest Airlines had to throw in the towel on its "Bags Fly Free!" branding and start charging for checked luggage last year. This year Southwest moved to assigned seating so they could start charging more for it.
And now the airline that started this race to the bottom has crashed.
The airline was navigating its second bankruptcy filing in two years. It held out hope the past few days that the federal government would bail it out. The Trump administration offered $500 million to pay off creditors— but in exchange demanded up to 90% equity in the company. The deal fell through. (I'm no expert on the specifics of the deal but that 90% equity thing sure seems like a "Fuck you" offer that would never be accepted.)
The most interesting thing to me about Spirit's demise isn't the last-minute government bailout offer, however legit or ludicrous it may have been. Nor is it the situation of stranded travelers, though I sympathize with their plight. (Rival airlines sympathize, too, as they have offered exceptional policies to assist stranded travelers.) What's interesting to me is that Spirit Airlines pioneered a business model the whole industry copied, and it just failed. 😨
Spirit started flying in the early 1990s as a charter service. Several years later it began scheduled service, bringing a new a-la-carte model to air travel in the US. Instead of including a raft of common services with its flight tickets, Spirit "unbundled" things such as checking a bag, choosing a seat, and even handing you a printed boarding pass. These became separate fees travelers had to pay.
Customers were outraged— or, rather, they feigned outrage, because as much as they decried what a hostile new business model this was, they snapped up the cheap tickets like the ignorant fools they are. Spirit made so much money by nickel-and-diming customers that eventually all the other US airlines had to change to compete. Now all the airlines offer "basic economy" tickets designed to look cheap on search engines while delivering extra profit through steep fees for once-assumed things like being able to pick seats at booking so your kids are near you. Even Southwest Airlines had to throw in the towel on its "Bags Fly Free!" branding and start charging for checked luggage last year. This year Southwest moved to assigned seating so they could start charging more for it.
And now the airline that started this race to the bottom has crashed.
