Spirit Airlines’ collapse, like its launch more than three decades ago, will impact consumers and the airline industry—and the Antitrust Division’s airline-enforcement program—for years to come. Spirit’s limited leg space and ancillary fees sparked endless complaints and memes. But each time Spirit marketed a low fare, it changed the competitive dynamics on the routes it served. Sometimes, consumers—like the student traveling to her friend’s bachelorette party, or spring breakers heading to Vegas—chose Spirit. Even when customers chose a competitor, though, Spirit influenced the fares those rivals offered. That “Spirit Effect” is nearly universally accepted.
So how did we get here, watching flight NK1833 land in Dallas and close out the history of this once-promising airline? Some who questioned the Biden Administration’s decision to challenge JetBlue’s acquisition of Spirit have called this outcome a direct result of failed antitrust policy. As one of the Division attorneys who brought that case, I offer a few observations about why this outcome was not necessarily predictable at the time or unavoidable. First, Spirit had another option on the table for which its management lobbied until shareholders chose JetBlue: Frontier. Also, during the investigation and ensuing litigation, no one—including the merging parties—suggested Spirit would liquidate without the merger. Spirit executives testified about plans for a return to profitability on a standalone basis. Lastly, airlines have unexpectedly been hit hard by soaring oil prices stemming from the Iranian conflict, which have fundamentally changed the cost structure of the industry in just the last few months. Spirit’s model succeeded by minimizing its costs; when that strategy became untenable, so did the airline itself.
