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CONSUMERS are bracing for higher prices and less choice on airfares following the collapse of Spirit Airlines, experts have warned, with costs projected to rise by up to 20%.
Spirit Airlines filed for bankruptcy on November 18 citing in a court filing at least $1 billion of debt.
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The filing comes just a week ahead of the busiest air travel season.
According to the TSA, the Wednesday before Thanksgiving and the Sunday after are among the busiest days to fly.
Travel experts say the potential downfall of the low-cost airline will mean less competition for budget travelers, meaning it will be harder to find good deals on flights.
Recently, The Wall Street Journal revealed the Florida-based airline was in advanced talks with bondholders for a bankruptcy plan, with the company struggling with mounting losses.
Read more on Spirit Airlines
The embattled airline has around $3 billion worth of debts, and execs have been scrambling to cut costs.
If Spirit goes away and takes its budget-friendly routes with it, we’re likely looking at less competition and, unfortunately, higher prices
Jesse Neugarten
Bosses revealed the company’s revenue is around $61 million lower, and its third-quarter profit margin is 12% lower than what it was in 2023.
Frontier decided to not move forward with the merger this week.
‘TROUBLE’ FOR BUDGET TRAVELERS
Dollar Flight Club founder and CEO Jesse Neugarten told The US Sun that the collapse of the airline would “spell trouble for budget travelers”.
He warned that consumers would face higher prices and less travel options if the budget airline filed for bankruptcy.
He said affected routes could rise by 15 to 20% on average, comparing it to when Wow Air collapsed in 2019 leading to a spike in transatlantic fares.
“While there’s a chance other budget airlines will step in eventually, travelers should brace for higher costs and stay flexible to keep finding good deals.”
Spirit has not reported a profit in five of the last six quarters.
Spirit Airlines is a budget airline that offers cheap tickets with add-ons for much of the services beyond a seat.
The strategy worked well for years, and was once a fast growing airline, but has more recently been challenged by high costs and more intense competition from other airlines.
The company’s executives have been negotiating deals to sell planes and have even furloughed staffers.
Spirit had agreed to sell more than 20 of its planes, and over 300 pilots will be furloughed on January 31.
The company estimates that more than $500 million would be brought into the coffers by selling the planes.
‘LONG-TERM LOSERS’
The company’s collapse comes after its CEO Ted Christie blasted the state of the airline industry.
In an earnings call, Christie warned customers were “long-term losers.”
“Today, nearly all the profits of the entire U.S. airline industry are concentrated in just two companies, while the smaller non-legacy carriers scrambled to restore profitability in what seems ever more like a rigged game,” he said.
“The Big Four are the beneficiaries of this new normal.
“American consumers are the long-term losers.”
The so-called big four carriers are American Airlines, Southwest, Delta, and United Airlines.
