Travelers accustomed to Spirit Airlines’ rock-bottom fares are facing sticker shock this summer as the carrier’s abrupt shutdown and rising jet fuel prices reshape the U.S. low-cost airline market. Just days after Spirit ceased operations in the middle of the night on May 3, the airline’s lawyer stood before a bankruptcy judge and apologized to the passengers who had relied on the carrier for affordable travel.
“We apologize most specifically for those Americans who may now be priced entirely out,” Spirit lawyer Marshall Huebner said in court, thanking all the passengers who had flown the airline during its 34-year run. Many, he said, “could not otherwise have afforded air travel.”
The airline’s demise is not the only reason budget-conscious travelers face higher costs this season. Jet fuel prices have jumped since the Iran war restricted Middle East oil shipments 11 weeks ago, squeezing carriers that operate on thin margins. The strain prompted the Association of Value Airlines, a trade group representing Allegiant, Avelo, Frontier, and Sun Country, to ask the Trump administration in late April for $2.5 billion in temporary financial aid. Transportation Secretary Sean Duffy rejected the request the same day Spirit stopped flying.
The larger carriers, meanwhile, have adapted to the price pressure by expanding their use of dynamic pricing, a strategy that has blunted the longstanding advantage of low-cost competitors. “Dynamic pricing has taken away one of the last structural advantages that low-cost carriers had,” said Shye Gilad, a former airline captain who now teaches at Georgetown University. The big three — American, Delta, and United — can now offer a handful of bare-bones seats at Spirit-level prices while still collecting premium fares elsewhere on their planes.
“They can’t just be the cheapest airline anymore,” Gilad said. “They have to be the smartest low-cost airline.”
Even before the fuel spike, the budget sector was consolidating. Alaska Airlines completed its $1 billion purchase of Hawaiian Airlines in 2024, and Frontier and JetBlue each made unsuccessful runs at Spirit. Last week, Allegiant announced it had finalized its roughly $1.5 billion acquisition of Sun Country, a deal that combines passenger service with Sun Country’s cargo and charter operations. “Consolidation is a signal” of industry weakness, Gilad said. “If you can remove a competitor and improve your product offering, you might be able to eke out more profit.”
Airlines for America, the trade group for the major full-service carriers, opposed the call for federal aid, arguing that government intervention would “punish other airlines that have engaged in self-help” and “sustaining businesses that cannot earn their cost of capital harms competition and consumers.”
The budget airline category remains diverse, and some carriers are better positioned than others. “Budget airlines are a pretty peculiar creature,” said Vikrant Vaze, an aviation systems expert at Dartmouth College, noting that the sector spans struggling carriers like Spirit and giants like Southwest Airlines. “They have very different levels of budget-ness.”
Allegiant’s focus on leisure travel from smaller airports gives it some insulation, while JetBlue relies more on premium seating and loyalty perks. Frontier, the airline closest to Spirit’s ultra-low-cost model, entered the current period with stronger liquidity and has moved quickly to expand in former Spirit-heavy markets such as Las Vegas, Detroit, Orlando, and Fort Lauderdale.
Gilad, who flew for the short-lived low-cost carrier Independence Air during a fuel-price spike in the mid-2000s, saw that airline burn through nearly $200 million in 18 months before shutting down in 2006. “They burned through almost $200 million in 18 months,” he said. “It was just that quick that they were gone.”
The same structural pressures remain today, Gilad said, but fewer budget airlines are left to share them.