From the New York Times, I'm Rachel Abrams and this is the Daily. When Spirit Airlines shut down over the weekend, it brought an end to a company that had revolutionized air travel in the United States with an ultra-lowcost approach. So today I talked to my colleague Niraj Chakshi about the so-called spirit effect on air travel, why it unraveled, and whether the problems that doomed spirit could spread to other airlines. And my colleague Lindseay Garrison talks to a Spirit flight attendant about what Spirit represented. It's Thursday, May 7th.

Yeah. I mean Spirit Airlines was this symbol of affordable travel in America. It allowed people to take trips that they couldn't otherwise afford for a large segment of the population. and it was the only way for them to be able to fly to places. And the end came really suddenly. They decided late last week it was time to wind down. And by Saturday morning, they shut down. That left 17,000 people who are directly employed or indirectly employed by Spirit out of work. Tens of thousands of people who had tickets, no longer had flights, and it left a gaping hole in the airline market.

Yeah, so Spirit's origin actually dates all the way back to the 60s. It started as a trucking company. They got into travel. They got into charter flights. They renamed to Spirit Airlines in '92, but most people didn't really know who they were. It wasn't until the mid 2000s that Spirit adopted the business model that we all know it for, and that's the ultra-lowcost air travel model. The idea is simple. You just cut costs as much as you can and you pass that along to passengers in the form of cheap bears. It was popularized in Europe by Ryionaire which is still going strong today and they thought that they could bring it to the US with success.

Yeah, they they did a lot. The key thing that they did which we all know them for uh is unbundling. Why should we have to raise everybody's ticket price when only some people want to eat or drink on board? We don't think that's fair. We think it gives customers more choice. And the real champion of this idea was Spirit's chief executive at the time, Ben Beldanza. Customers are welcome to bring water on the plane with them. We're not stopping that, but we sell what we sell. They started to separate everything out so that seat assignments cost extra money. even water. You're paying for carryons, having them print your boarding pass, but the seat itself could be really cheap. So, if you didn't need some of those things, you could actually buy a really dirt cheap ticket.

I didn't realize this that they literally charge you to print your boarding pass. It's like they're charging for everything except flying. Like everything else is considered a luxury just to keep the ticket as cheap as possible, right? And the idea is that, you know, some people don't need it. They're happy to pull it up on their phones or they're they don't need customer service, so why would they pay the extra fee for it? I recognize our airlines not for everyone. If you want to be coddled in the airport, if you want an enormous amount of leg room, if you want a free coke, we're not your airline and we're not built to be that airline. But if you want to save $150 round trip, we're a great deal. Come fly us.

And they publicized this all with these racy, provocative ads. One of them was what they call the mil sale. That's an acronym that some people may know. It's kind of a runchy meaning. Yep. From American pie, I believe. Yeah. Exactly. Right. But for spirit, you know, it means many islands, low affairs. A gross expression taken from the movie American Pie was adopted by Spirit Airlines. I mean, you know, and they go viral, right? I mean, they're not only getting a lot of attention on their own, but, you know, news organizations start to cover them. Spirit Airlines has a $69 campaign that, you know, if you don't understand the 69 reference, then Google it. They start selling tickets for numbers that, you know, have other meanings for, you know, let's say $69. I didn't know any of this. I am horrified. Social media is buzzing about this. On our Fox 29 Facebook page, Lori wrote, "How about grow up?" Victoria wrote, "I read the ad and kept waiting to be shocked. So much hoopla over that." And spirit starts to get a lot of attention. people start to kind of get to know this airline, right?

yeah, there was a lot of skepticism. Consumers saw it as nickel and dimin them. investors had doubts that people would really want to fly on an airline like this or that the model could work. And they were the butt of a lot of jokes. This is pretty crazy here. Spirit Airlines is considering a new fee to talk with a human face to face during check-in. Yeah. Which explains the company's new slogan, Spirit Airlines. Why are you flying Spirit Airlines? Weird. I mean, on late night shows, the idea that like you would have to pay for a water bottle while flying or a printed boarding pass, I mean, it just is outrageous. The CEO of Spirit Airlines said people shouldn't come to Spirit if they want lots of leg room. He said, "We call it Spirit Airlines because there's only enough room for your Spirit." And if I'm being honest, even that's going to get a little crushed. But, you know, they embraced it. And when they got criticism, they would push back and say, "Look, we're here to make travel affordable. That's what this is about. And take it or leave it." And it was slow at first, but then people start to fly on Spirit and it starts to pick up. And they go public in 2011. And by the next year, they're flying about 10 million passengers. They're doing really well. And by 2016, they're up to 20 million passengers. And what was behind all that growth? I can't imagine it was just the racy mil ads.

Yeah. I mean, they are stealing travelers from other airlines, but there's also this idea that they're bringing people in off the sidelines. So, people who normally wouldn't be flying, but they see an opportunity because the flights are cheap enough. It might be making that choice instead of ordering takeout. And this is something that Ben Beldons himself says is he's like, we're not necessarily competing just with other airlines. We're competing with other forms of spending. M and this new approach that Spirit has is starting to affect the wider industry where when Spirit enters an airport for the first time, you see fairs drop. Other airlines have to compete and so they have to reduce their fairs. It actually becomes the subject of academic study. It's called the the spirit effect.

Did you feel like Spirit was different than other airlines? Oh yeah. I mean, we were the market disruptor. We did cause the fairs to be lower. They called it the spirit effect. The first time this really resonated with me was when I was flying back from Fort Lauderdale and I did not have my lanyard on. I was out of uniform and I sat next to this gentleman and his son and we had a little bit of turbulence and then you could hear the hydraulics and that's always something that either freaks people out or you know it sounds kind of like a dog. it sounds like something and it's normal. It's completely normal on the Airbuses. And I could see him getting panicked. I was like, "Yes, it's normal. It's just a hydraulics. It's okay." And so we're sitting there and we're, you know, I'm just kind of talking to him and he like has a moment and he's like, "Wait, how did you know that was okay? How did you know that sound was? Are you just telling me that?" And I like laughed again and I was like I was like, "I'm not wearing my lanyard. I'm actually a spirit attendant." I was like, "I promise it's normal." And he was like, "Oh, okay." Well, then he started talking to me and I remember this gentleman being like, "You guys make it so affordable for me to take my son on these trips every once in a while." You know, it sounded like he shared custody with his son, so this was something very special that he liked to do with him when he had him. He was a blueco collar worker. He was like, "I'm terrified of flying, but I really love being able to do this and love being able to try taking my son to see different places." And that was a moment for me that I was just like I not that I didn't already have pride, but I really started to have pride in spirit and our brand and what we did and the accessibility that we brought because we did we had so many first we had so many first-time flyers, so many families, so many people that never would have gotten the opportunity to fly if it wasn't for us. And I really loved that we had a carrier that was able to offer that to people that you got your seat and like you were able to fly the $49 roundtrip ticket and hop on a flight for the weekend to see your family that you normally wouldn't have been able to do because all you cared about was getting from point A to point B safely. You didn't need the super fancy seats. You didn't need the pretzel snacks. You didn't need the single pore of Coca-Cola. Like it was about getting there and it was about the journey that you were going to have once you got there. We were able to connect people that otherwise wouldn't have been able to afford to be connected.

Well, a few things start to happen. The first big thing is that Spirit becomes a victim of its own success. They can't be ignored anymore and they're flying in a lot of places where the big airlines are flying too. And so the big airlines introduced something called basic economy which is basically a a spirit competing fair. It comes with a lot of restrictions. It doesn't include a check bag or carry-on bag. You often can't pick your own seat, but you can pay for those, right? Just like Spirit. M but the problem is that these bigger airlines, they also have a lot of resources. So, right, because if you have a choice between United and Spirit and they cost the same, you're probably going to go with the bigger airline, right? Spirit may be flying on a route twice a day and United might fly the same route eight times. If your flight gets canceled, there's a backup. There's also customer service. There's all these other benefits for flying with the big airlines. And so, if you're looking at the same cost, you might be inclined to choose them. And that poses a really big problem for Spirit. They can't really lower fairs much more than they already have. And so to compete with the big airlines, they have to start to improve quality. They have to get you to where you're going on time more often. They have to have better customer service. And that's expensive. And that puts a lot of pressure on Spirit's business model. And keep in mind also the big guys, they have more profitable seats at the front of the plane. So they can subsidize basically economy seats. Spirit doesn't have that. Right. Spirit does not have a $2,000 business class seat. Exactly. Yeah.

Yeah. So, you know, the pandemic obviously hurts all airlines equally, but then there's this faster than expected recovery. People really want to travel and so there's this fierce competition going on and that keeps fairs low, makes it hard for Spirit to earn a profit. At the same time, a lot of pilots end up retiring during the pandemic, but then, you know, in the years after, airlines really need them back, and so they end up paying a lot more to stay competitive. That starts with the big airlines, but then everybody else has to do their best to match because there just aren't that many pilots around. So, you know, Spirit starts to see that labor, one of their biggest costs is going up. And their edge is all about costs. And if their costs are starting to look a lot like the same costs that the big airlines have, then they've lost their edge. So they're in this position where costs are rising, competition is fierce, and there are all these other problems that they're just having to deal with. And so then they decide they need to do something to get back on track.

Yeah. Well, one thing they try to do is is they actually try to merge with one of their rivals, Frontier Airlines, which is another budget carrier. They announced this in 2022. And the thinking was that they're struggling. Things are hard, but if they could create this big national lowcost carrier that they might actually be able to to kind of make some moves, you know, they might be able to take on the bigger airlines in a better way. But then JetBlue Airways decides it actually wants to acquire Spirit and it makes a better offer and it ends up squeezing Frontier out and they go forward with a JetBlue Spirit merger. But then the Justice Department says, "Wait a second. We like Spirit. Spirit does good things in the airline industry. It keeps fairs low." And so they sue to stop the merger because they're afraid that if JetBlue takes Spirit in, they're going to change the way Spirit's planes work. They're going to change the business model and they're going to end up raising fairs. They're basically arguing that if these two airlines merge, it would be bad for consumers. It's basically an antitrust argument. Exactly. Exactly. One of the things that Dreloo said during the merger process is that we're going to take some seats out of Spirit's plane. Spirit packs in the seats really tightly to fit as many people as they can on a plane. JPloo says we're going to add a little leg room, make it a little more comfortable. But the Justice Department says, "Well, wait a second. That means that your costs are going to go up. you're going to have to charge more to cover them. And what was Spirit's counterargument to that? Yeah, you know, Spirit and JetBlue were saying, look, this is going to be good for consumers because we're going to have more market power. You know, JetBlue is a lowcost airline. It's not what Spirit is, but JetBlue does compete to keep fairs low and that together, you know, as as a national player operating in all these airports, we would be able to actually serve consumers better. Basically, they're saying if we can pull our resources together, we're going to be able to compete better with the big guys. and Argo, we're going to be able to give customers lower fairs, right? You know, with with enough scale, we have the resources to keep fairs low in a lot more places. But then the federal court judge decides that Spirit's presence at an airport can lower fairs by 10% and we need that in the market and this merger is anti-competitive.

Okay, so merger doesn't happen. Where does Spirit go from here? So they file for bankruptcy in 2024. They get out of bankruptcy in 2025, but then file for bankruptcy again in 2025. And then coming into this year, the Iran war starts and that sends fuel prices skyrocketing. And Spirit has a plan to get out of bankruptcy, but then it seems like with fuel prices this high, that plan is just not going to work. Right. That would be a challenge for any airline to suddenly have to shoulder these rising fuel costs, but especially a challenge for an airline that has just gone through two bankruptcies and is really trying to keep its costs low to stay competitive. Exactly. You know, labor costs have already gone up, fuel costs are now going up. Those are the two biggest costs of for any airline. And so, the Trump administration steps in and they say, you know, what can we do? These are a lot of jobs. This is an important airline to the economy. And on top of that, presumably the optics of this do not look great, right? Having an airline, specifically an airline that caters to workingclass people, go under because of a war started under the Trump administration. Exactly. And they float this idea of a $500 million lifeline. The government would step in and lend the company that money, but the government wants protection. You know, they don't want to lend money with no strings attached. They want to get preferential treatment over the other lenders that have lent Spirit money. and Spirit's existing lenders don't love that idea. So, they continue talking, but late last week, it becomes clear that there's not really a path forward. There's just not a deal to be done. And so, Spirit's lenders tell Spirit, you know, we think it's time for you to wind down. And, you know, they have to move quickly. Airlines are expensive. You can't announce that an airline's going to shut down weeks in advance because a lot of people are going to start to peel away. And so, on Friday, they continue flying. They fly 50,000 people. The last flight in lands in Dallas just after midnight and Saturday morning at just after 2 am they announce we're done. Spirit Airlines is shut down.

Um, so this might make me choke up, but um, at about 11 p.m. called into a meeting by our AFA International President Sarah Nelson and um, I just remember seeing Sarah's face. Sorry. And I knew it was over and she told us it was it was over and that we were shutting down. And um we all cried a lot. It's been a really crazy um 72ish hours for all of us um because we're losing our family. Are you hearing from colleagues and friends? I'm actually um I'm I'm at one of my friends house with about eight other flight attendants right now. Oh my gosh. And it it's like we're all grieving. We're all still here, but I think we're like grieving the loss because like spirit's the catalyst that like brought us all together and like that's gone now. And um after you've spent years dedicating this time to this company that you had so pride and you believed in and that you love and you love the people that you work with, it it just comes in waves. It comes in waves. You know, I kind of always thought like if something were to happen like I would walk away from aviation. And that last week I was like there's no way there's no way that I can walk away from aviation. Um it gets into your it gets into your bones aviation and I just like there's there's truly like thinking back on it and then like there isn't anything else that that I want to do. But there's just something about it. the, you know, the black and yellow in our blood that I, you know, it's going to be hard to ever find that again for us. It's never going to be the same.

Senator Raj, we mentioned earlier in our conversation that there's been this outpouring of grief from people who travel, who took Spirit, who are so sad that it has gone away. Can you just describe for us what did that grief look like? What did it sound like since Spirit announced that it was going under on Saturday? Yeah, you know, I think the immediate reaction for some people was surprised. We heard from people at airports on Saturday who had no idea this was coming and showed up and you know very quickly had to figure out how they were going to get home. But I think you know as frustrated as people were at times with spirit I think people really started to understand its place and appreciated it for what it was. This is a sad day. Thousands of people that really depend on this lowcost airline to travel that may not have otherwise gone anywhere. Um, and I think seeing it gone is sad for a lot of people. Spirit was good for, you know, the working consumer who loves to travel, who knows how to pack light. I've taken Spirit a lot of places. And, you know, looking online, you see this outpouring of tributes to Spirit. This is kind of heartbreaking because whenever I wanted to get like a cheap last minute flight somewhere, I'd be like, "Let's check Spirit." And now I won't be able to do that. And there were a lot of travelers out there who were able to go on vacation because of airlines like Spirit. Spirit never did me wrong. Like, do you understand how much flights cost nowadays? Like on some real stuff, flights are super expensive. And so it really did have a place for people.

What is your diagnosis ultimately, Naj about what spirit's downfall was? like how much should we attribute to the rising costs associated with the war in Iran or other headwinds faced by budget airlines or the airline industry as a whole? It's definitely death by a thousand cuts. I mean, Spirit just had an unforgiving few years and they just could not catch a break. They couldn't get stable footing. But, you know, I think it also shows that this business model itself is really unforgiving. there's not a lot of buffer and so if one too many things go wrong it's hard to recover. Hindsight is obviously 2020 but how should we be thinking about the merger that the DOJ blocked in 2024 because at the time Spirit said we need this. The DOJ obviously didn't buy that argument and now here we are. Yeah. It's it's really set off this political debate. The Trump administration says, you know, look, the Biden administration interfered and now Spirit's going under. And some experts I've talked to agree. They say that, you know, had this merger gone forward, this new combined airline might have been able to survive and be vibrant and lower fairs across the country. But then a lot of experts aren't so sure. Airline mergers are notoriously difficult to pull off. They cost lots of money, and there's just no guarantee that it would have ended well for JetBlue and Spirit. I want to talk about what Spirit's demise means for the future of air travel more broadly. Like since they came on the scene, there have been other lowcost budget airlines like Frontier and Allegent. So what does the collapse of Spirit mean for those guys if anything? It's a mixed picture. So you mentioned Allegian and and they actually adopted this model around the same time as Spirit and they have actually done pretty well. They just actually are in the middle of acquiring another airline, Sunountry. And part of the reason for their success is unlike Spirit, Allegian was able to stay off the radar of the big airlines. So about 75% of their routes, they have zero competition. But you know, others not so much. Frontier like Spirit is facing a lot of the same problems. I do wonder also about the bigger airlines, the United Americans, etc. Like I do wonder whether the bigger guys will now have just that much less incentive to offer competitive lowcost fairs. Do you foresee that happening? Yeah, the experts that I talked to do think that fairs are going to rise and they say that to some extent that probably was going to happen anyway. Fuel costs have gone up. Airlines have to cover that. But for the big airlines, they're so much more focused on the elite traveler. They have really discovered that in the last few years that if they invest in those people who are willing to spend a lot of money, they can earn a lot of profit. And it's worked exceptionally well for airlines like Delta and United. They've invested in lounges. They've invested in their loyalty programs. They've invested in fancy seats and plane renovations. And it's really paying off. And so, will they still compete for basic economy travelers? Sure. And those are travelers that they see maybe someday upgrading to main economy and up to business class. But right now, those airlines are really focused on the front of the plane, those nice big fancy seats. It's interesting because the spirit era was really marked by these airlines stripping amenities out from what they offered so that they could offer lowbudget fairs. But what you are describing sounds like almost going in the opposite direction like more and more offering these luxury amenities. And it feels as though what you are describing is a real widening of the division that already exists in air travel and so many other facets of American life between the halves and the have nots. Yeah, you know, I mean, Spirit in its early years really democratized air travel, but even before it shut down, Spirit was embracing catering to the premium traveler. They last summer announced plans to add premium seats at the front of their planes. And they actually started to rebundle their fairs so that you could buy a single ticket that included a lot of the things that they once stripped out. So even before Spirit went under, we were already starting to see a retreat from that business model that was just sharply focused on low costs and low fairs. And so there's this sense that yeah, maybe the industry is headed in a direction where it's not as focused on serving everybody.