How Can Spirit Airlines Become Profitable? | Airlines

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A judge has just ruled to block JetBlue’s takeover of Spirit, arguing that it’s bad for competition. This obviously has major implications for both JetBlue and Spirit, and barring a successful appeal, the airlines are going to have to figure out new strategies ASAP.

Understandably, many people are applauding this decision, saying that Spirit typically has the lowest fares in the markets in which it operates, and it’s important to keep the airline independent. I totally get that sentiment, but there’s only one major problem… I wanted to take a closer look at that in this post.

Spirit Airlines has been losing money for four years

Spirit Airlines hasn’t turned a profit since the start of the pandemic, so the airline has been losing money for 16 consecutive quarters. Obviously the first couple of years of the pandemic were rough for airlines. However, the past couple of years have been fantastic for many carriers, as we’ve seen a strong recovery in leisure demand.

Unfortunately ultra low cost carriers haven’t benefited from this in the same way as the legacy carriers, at least here in the United States:

  • We’ve seen a massive increase in labor costs in the airline industry, and this has the biggest impact on ultra low cost carriers, since their business models are most reliant on a low cost structure
  • Much of the leisure demand has been for both premium and long haul travel, and these are markets in which ultra low cost carriers typically can’t compete, due to their fleets and cabin products
  • The legacy carriers make a large percentage of their profits…

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