Bankrupt Spirit Airlines Wants To Change Its Business Model, Dropping What Made It Famous

Spirit Airlines used to be one of the most profitable airlines in the U.S.

It was known for nonexistent customer service and cramped airplanes, but it made profits consistently, and it made them by keeping its costs (and its fares) much lower than the big network airlines.

That went away in 2020, when the COVID-19 pandemic scrambled the air travel industry — and Spirit posted its last quarterly profit. It has not made money since.

A major reason is that legacy airlines have figured out how to beat Spirit at its own game by offering what they call “basic economy” fares: You get a seat from A to B, and anything else is a paid extra.

Now Spirit, facing financial distress and debts it can’t pay, has filed for bankruptcy, though it will keep flying as normal while it figures out a way back to profits. According to its own strategic plan, it wants to do that by trying something it’s never done before: behaving more like a traditional airline charging more for better service.

Here’s how it would work, and why it matters for flyers.

Spirit’s Plan and Proposed Changes

Spirit Airlines hasn’t made money for several years, and it recently filed for bankruptcy.

Ishrion Aviation posted on X some slides from Spirit’s plan to exit from bankruptcy. The slides, presented by Spirit and law firm Davis Polk, detail a strategy that continues the airline’s move toward a business model more in line with the legacy carriers.

Spirit had already eliminated several fees earlier this year, and with this new strategy, you can expect to find an experience aboard Spirit that’s more like American Airlines or Delta Air Lines. That means less of the classic ultra-low-cost model where passengers pay for everything besides the bare seat, including water.

Spirit calls this “Enhancing the Guest Experience,” and here are the major changes the plan introduces:

• Spirit now differentiates between passenger experiences like legacy carriers do, selling 4 different fare types: Basic, Standard, Premium Economy, and BFS (“Big Front Seat” with more legroom). These different fare bundles have already been introduced.
• Priority boarding according to fare type and status in the Free Spirit loyalty program. This is another change that’s been in effect since August.
• Besides the Big Front Seat, there will be an expanded Premium Economy cabin with blocked middle seats.
• Separate check-in for premium passengers will be expanded to more airports.
• Priority boarding and access to upgrades for cardholders of co-branded Spirit credit cards, like the Free Spirit^® Travel More World Elite Mastercard^® and Free Spirit^® Travel Mastercard^®.
• Everybody gets water and a snack for free; other items are still for sale.
• Free Wi-Fi for members of the Free Spirit program, but free streaming is reserved for premium cabins.
• Premium passengers get more mileage accrual and benefits in the Free Spirit program.
• Improved vouchers, refunds, and accommodations in case of cancellations or delays.
• “Concierge contact channels” for passengers with high status in the loyalty program and cardholders.

As for when these changes will happen, Spirit’s bankruptcy filing said they will begin this year. That means we can expect to see loyalty program changes and more premium check-in lanes at Spirit’s biggest airports already in 2024.

In 2025, we’ll see power outlets onboard and bigger overhead bins.

Other changes as part of the bankruptcy plan are more on the operational side. Spirit will concentrate its flights on cities and seasons where “profitability is substantial,” adjusting its network by closing some routes and opening new ones.

A slide even contains an idea for something that ultra-low-cost-carriers rarely do: “explore joint ventures and alliances.” (The plan does not explain how or with whom.)

Will Spirit’s Upmarket Move Work?

If Spirit’s plan to return to profit reads like a list of things that legacy carriers already do, that’s because it is.

For passengers, this is good news. The things that tended to infuriate people about Spirit Airlines are on the way out. In particular, the airline wants to do customer service much better than it has until now.

Whether the changes that passengers will appreciate would also bring profit is less certain.

Prominent skeptics include journalist Brian Sumers, who wrote in his Substack newsletter, The Airline Observer, that Spirit “wants to be Delta-lite” and that the strategy may not succeed. The customers who want the low fares Spirit has offered won’t be happy when that stops, he argues.

Final Thoughts

Earlier this year, a federal judge blocked the proposed merger of JetBlue and Spirit with the rationale that it would have caused higher airfares. Spirit, the judge said, offered a valuable service by providing competitive fares.

Ironically, Spirit may no longer offer those low fares when it emerges from bankruptcy in 2025.

The airline is rolling out a new strategy based on going after a more premium segment of the market, which is the opposite of what fueled its growth. We will find out in 2025 whether that plan has worked. In the meantime, Spirit Airlines passengers will experience an airline that feels less ultra-low-cost and more like a legacy carrier.