On the menu today: As recently as 2023, Spirit Airlines was the fifth-largest airline in the United States, with 44 million international and domestic passengers. And now it’s gone.
Republicans and Democrats have spent the past few days scapegoating each other for the demise of Spirit Airlines and the consequent loss of about 17,000 jobs. Republicans insist the Biden administration’s rejection of a potential merger with JetBlue Airlines doomed Spirit, while Democrats insist the airline’s collapse was a direct consequence of the higher fuel prices generated by the Trump administration’s decision to go to war with Iran.
They’re both partially right but missing the big picture. The denial of the merger was akin to a diagnosis of stage four cancer, and the jump in fuel prices was analogous to lapsing into a coma. But it was Spirit Airlines’ creditors who rejected the idea of a government bailout, which effectively pulled the plug on the respirator. Read on.
What It Takes to Run an Airline
Pretend you want to start up a new airline.
You’re going to need some planes. Some airlines use just one kind of plane to simplify training, maintenance, and repair costs. Spirit Airlines used Airbus A320 jets — the highest-selling kind of aircraft ever built. An Airbus 320 jet costs about $100 million. Airlines pay a lower price per plane when they buy in bulk; this is one of the reasons that larger airlines have an advantage over smaller airlines.
As you can see, passenger air travel is a capital-intensive business.
Then you’re going to need some pilots; the median annual wage of a commercial airline pilot is $122,670, according to the Bureau of Labor Statistics. Remember that under Federal Aviation Administration regulations, there are limits to how many hours a pilot can work in a day, week, and month. For two-pilot crews, the limit is no more than 32 hours in a week, no more than 100 hours in a month, and no more than 1,000 hours in a year.
You also must pay salaries for the rest of the flight crew.
Then there’s maintenance, which is, on average, 10 percent of the operating costs. In 2022, operating an A320 jet cost, on average, $12.8 million per year, so the maintenance costs would be about $1.2 million per year, per jet.
So now you’ve got a jet, a pilot, a crew, and all your maintenance costs covered. But wait, just operating out of the airport is going to cost you, too.
The fees that airports charge airlines vary from airport to airport, but generally an airline has to pay rent for the ticket counter and gate use. From a summary published in 2018 by an accountant who works for an airport:
Rent is charged per square foot for ticket counters, gate space, hold rooms, baggage areas, the apron, etc. The typical lease is for a term of three years. Rates vary depending on the area. Ticketing counter space is the most expensive at $103/sq ft. Baggage claim is less at $82/sq fr. A big airline with many gates and lots of space can expect to pay $400,000/month in rent. A small airline with a single gate could pay closer to $90,000/month.
Then, if an airline needs additional gates, they can expect additional charges.
That same site above also lays out the terminal use fees that airlines are charged: “These are calculated per enplaned passenger. We are currently charging just over $7 so a departing flight with 150 passengers will pay around $1050.00.” Then there are landing fees. “Landing fees are charged per 1000 lbs of max gross landing weight (MGLW). We see A LOT of E175s at my airport, each of which has an approximate MGLW of 75,000 lbs. That’s $237.75 per landing for a signatory airline and $356.25 non-signatory.” Again, this is from 2018, so it’s safe to assume the costs are higher today.
Every expense associated with that flight must be covered by what passengers are paying — and we haven’t even covered the cost of your company headquarters, advertising, etc.
Also keep in mind that the prices you charge as an airline get increased by federal taxes. Airlines for America — the U.S.-based airline trade group — lays out an example of how a round-trip flight from Peoria, Ill., to Raleigh/Durham, N.C., connecting through Chicago O’Hare, would have a base fare of $325.21 but cost $400 once you add up the federal excise taxes, passenger facility charges, federal security surcharges, and federal flight segment taxes.
And remember, every empty seat on your airplane represents a missed opportunity for much-needed revenue.
As you can see, just getting a plane from one city to another involves substantial costs that must be covered by the fares of the passengers on that plane; that’s why just flying an A320 plane costs $4,829 per hour. That’s not covering meals, the little bag of pretzels, the blanket, slippers, or the in-flight magazine.
And the cost of fuel is indeed one of the biggest variables. In 2019, United Airlines spent $8.9 billion on aircraft fuel, approximately 23 percent of its $38.9 billion in expenses that year. Keep in mind, the amount of fuel a plane uses can vary depending upon whether it is flying with or against the jet stream, other weather factors, the weight of the passengers and luggage, etc.
Now, when the costs of operating a jet go up, some carriers can charge more, knowing their first-class and business-class passengers will pay and not grumble too much. But if you’re a discount airline, by raising prices, you’re mitigating the main advantage you have over your competition.
Looking at all this, you might wonder how any airline stays in business, and why any flight cost could ever seem inexpensive — say, $56 from Baltimore-Washington to Atlanta in June.
Well, you might say that in some cases, instead of having airlines that run a credit card deal on the side, we have credit card companies that subsidize the air travel industry on the side. Courtney Miller observed last year, “No network airline made money moving people and things in 2024, including United Airlines and Delta Air Lines.”
Credit card companies purchase frequent flyer miles from the airline and reward them to the credit card user. Sometimes the credit card user redeems the miles and flies somewhere, but sometimes they don’t. But to the airline, it doesn’t matter that much, because the credit card company has already bought the miles and provided that revenue. In 2024, because of these payments from credit card companies, United, Delta, American, Southwest, and Alaskan Air all made operating profits.
Spirit Airlines had a credit card partnership with Bank of America. But this is another situation where large airlines have an advantage over smaller ones. After all, would you rather have a credit card and frequent flyer miles and potential free trips on a large airline that flies many places, or a smaller one that flies fewer places?
Spirit Airlines enjoyed a good rebound from Covid with the spate of “revenge tourism” in the years afterwards — such a good rebound that they expanded . . . perhaps too quickly:
By 2021, given that much of Spirit’s network was domestic, the airline had rebounded strongly and was back operating some 97 percent of its 2019 capacity. Building on that recovery, by 2024 the airline scheduled capacity growth of 20 percent against 2019, based on expansions of 20 percent in 2022 and 13 percent in 2023. In just two years, Spirit added a third more seats as the airline rode the wave of post-pandemic revenge spending. But that spend was exactly that, just a wave rather than a change of market structure.
Spirit expanded into lots of new destinations but didn’t offer daily flights. From a September 2025 analysis of Spirit’s filing for Chapter 11 bankruptcy a second time: “Given that the average capacity per flight for Spirit in 2025 is 193 seats, then over half of the current network is served with less than daily frequencies — which for a low-cost airline seems a fragmented position . . . while Spirit may have significant volumes of capacity at key airports, the scale of network fragmentation is quite pronounced, leaving travelers with limited choice of flight timings and the airline vulnerable to competitive scheduling in many markets.”
Had the post-pandemic “revenge tourism” surge in travel represented the new normal, Spirit probably would have carried on. But it didn’t, and Spirit found itself with big structural problems — too many flights to too many places with not enough passengers and too many empty seats. This was why they sought the merger with JetBlue and why they declared bankruptcy twice.
Back on March 7, 2023, then-Secretary of Transportation Pete Buttigieg posted on X, “Americans deserve robust competition and affordable airfares. [The U.S. Department of Transportation] supports [the Department of Justice’s] antitrust lawsuit, and we plan to deny the JetBlue-Spirit request for an exemption on their merger deal.”
The Biden team filed suit to stop the merger, and on January 16, 2024, Judge William Young ruled in their favor, concluding, “If JetBlue were permitted to gobble up Spirit — at least as proposed — it would eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline. . . . The proposed merger, as it stands, would substantially lessen competition in violation of the Clayton Act.”
On March 5, 2024, Elizabeth Warren posted on X, “I’ve warned for months that a JetBlue-Spirit Airlines merger would have led to fewer flights and higher fares. [The Department of Justice] and [Department of Transportation] were right to stand up for consumers and fight against runaway airline consolidation. This is a Biden win for flyers!”
But with Spirit Airlines now gone, it doesn’t look like much of a win for anyone. In fact, it looks a little silly to argue that Spirit couldn’t merge with JetBlue because it needed to remain separate to preserve competition . . . when it no longer exists as a competitor. And since the merger was blocked, Spirit became less and less of a competitor to the other airlines. Spirit’s fleet and routes had shrunk considerably over the past two years; “Before it shut down, Spirit’s schedule for May would have amounted to just 1.1 percent of domestic flights.”
Could the merger with JetBlue have saved Spirit? Well, clearly Spirit was not overstating the severity of its economic problems. The combined fleet, crew, and routes would have given the merged pair better advantages in terms of economies of scale.
But keep in mind, JetBlue is not in such great shape, either; as of December, it had $9.4 billion in debt. David Neeleman founded JetBlue in 1999 and has since moved on to found Breeze Airways. Last month, Neeleman speculated about JetBlue’s potential bankruptcy because of the higher jet fuel prices. JetBlue’s CEO, Joanna Geraghty (no relation), told employees a few days later that the airline has ample liquidity and access to additional capital, and would not be declaring bankruptcy this year.
Then the U.S. went to war against Iran, and fuel prices increased dramatically. Shye Gilad, himself a former airline pilot, put it bluntly to CBS News: “When you’re a low-cost carrier, by definition, you’re relying on having a cost advantage. And they just don’t have that anymore.”
There was one last move that could have kept Spirit operating: a de facto government bailout. In late April, the Trump administration floated one of its favorite ideas, a government ownership stake in a private company:
The government would lend Spirit $500 million at a reasonable interest rate, and become the top debtor in the bankruptcy pecking order. The loan would be protected by Spirit assets that would exceed the government’s costs, and would provide taxpayers with a warrant — the right to own 90 percent of the company after it emerges from bankruptcy.
The Pentagon would use Spirit’s excess capacity for transporting troops, military cargo or other missions, sources told CBS News.
(Remember when Republicans hated using taxpayer dollars to bail out failing companies? Good times, good times.) Here at NR, Veronique de Rugy and Gary Leff called the proposed deal “nationalization in everything but the paperwork.”
But Spirit already owed a lot of money to a lot of people, and those creditors were not eager to take a back seat to the government, particularly regarding an airline that had already declared bankruptcy twice. According to CBS News, some of Spirit’s bondholders, including Citadel and Ares Management Corp., had opposed the proposed bailout, and a counterproposal from creditors was rejected by the government.
Spirit had 125 Airbus A320s operating as of February. Those planes won’t remain idle forever; some other airline is going to buy them and probably get them at a bargain price. The majority of those 17,000 laid-off pilots, flight crew, and desk agents will get hired by other airlines eventually. This situation really stinks for those laid-off employees, but their company couldn’t figure out how to get more money coming in the door than the amount of money going out the door. It happens to businesses all the time.
This weekend, Matt Stoller wrote, “We either re-regulate our airline sector to operate as a public utility, or the American travel system will be regulated by just four airline CEOs, for their benefit.” (I thought everyone was angry at public utilities for raising electricity rates and helping data centers.)
The argument from many Democrats is that U.S. air travel is already dominated by monopolies; Biden officials like Tim Wu argued that the bigger airlines get, the worse the service becomes and the higher the fares get.
But many will fairly ask how you can have a monopoly when multiple companies are competing for customers by offering the same service in the same places. “An analysis of DOT data conducted by Compass Lexecon, an economic consulting firm, shows that the average number of competitors in U.S. domestic city-pair markets has increased over the last two decades: from 3.3 carriers in 2000 to 3.39 in 2010 to 3.47 in 2022.” The more popular the route, the more competition there is; 45 percent of all flights taken in the U.S. in 2024 were among the top 20 busiest cities. There’s going to be much more competition (and lower fares) between Los Angeles and San Francisco than there is from Peoria, Ill., to anywhere.
The top four U.S. airlines — American, Delta, Southwest and United — offer about three-quarters of the total seats on all flights across the country. As laid out above, passenger air travel is a tough business to break into; no one’s starting a new airline out of their garage. But Breeze Airways didn’t exist until 2021; now, it’s the tenth-largest airline in the country.
Finally . . . one way or another, I’m always talking about a group of jets based out of New York City that are suffering a disappointing setback.
ADDENDUM: The new spin from the likes of former Barack Obama speechwriter Jon Favreau is that Maine Senate candidate Graham Platner isn’t a Nazi, and criticism of him is bad faith, because he’s “never said a single word in [his] entire life that could be construed as sympathetic to Nazis.”
In other words, it’s just the tattoo.
And the retweeting of an antisemite conspiracy theorist, Stew Peters. Or his sitting down for an interview with another antisemite conspiracy theorist, Nate Cornacchia, where Platner said he was a “longtime fan.” Or his praise for Hamas. Or this observation by the NRSC: “Every one of the eight active ads that Platner is running on Facebook and Instagram, according to Meta’s political advertising library tool, includes a repudiation of AIPAC, and around half accuse Israel of genocide.”
Doesn’t it seem a little weird for a Senate candidate in Maine to be running a campaign so relentlessly focused on opposition to Israel? (In case you’re wondering, there are about 10,000 Arab-Americans in the state of 1.4 million people.)
Remember, witnesses said Platner knew darn well what that tattoo was and called it, “my Totenkopf” more than a decade ago. As I wrote back in October, “We can all agree that if you have a tattoo of the SS, and you know that it’s a tattoo of the SS, and you keep it for years and years, then you are, functionally, a neo-Nazi.”