Spirit Airlines stopped operating at 3 AM on Saturday morning. 14,000 jobs gone. 30+ smaller airports lose service. The specific triggering condition that killed the airline was the inability to secure a $500 million bailout in the form of loans and loan guarantees. Analysts cite Spirit’s years of financial mismanagement as one key cause of its demise.
What is the bigger picture here? Were there other factors in the history of this airline that contributed to its failure?
Spirit Airlines had been having difficulties for an extended period of time. Back in 2022, JetBlue offered $3.8 BILLION in cash to buy Spirit so the airline could be saved. Competition with the Big 4 (80% market share) would have been preserved. Shareholders, the unions, management, literally everyone voted yes.
So, what happened? The merger was vehemently opposed by the Democrats. Sen. Elizabeth Pocahontas Warren was the epicenter of this opposition. The Biden administration wholeheartedly supported this. They pressured DOT head “Mayor Pete” Buttigieg. Biden’s DOJ sued. All of this was coordinated by Warren and the Biden WH. A federal judge killed the deal in January 2024.
Their argument: Competition would be reduced and the merger would cost consumers $1 billion a year.
Competition reduced? The merged entity would have had roughly 8-9% of the market. While I am sure that in some instances a reduction in route opportunities may have led to fare increases on some routes with the merged airlines, what will happen now? How much more will people have to pay to the Big 4 to travel the same routes?
These smaller regional type carriers do bring clear fare reductions and competition. The disappearance of Spirit will undoubtedly hurt that picture. We already have seen significant fare increase on routes that Spirit abandoned during its death spiral. On average fares have increased 14% on those routes.
There have been some spectacular increases. Oakland to Newark: $135 to $288. Fort Myers to San Juan: $92 to $219. Kansas City to Newark up 66%. I think I see a benefit to the Big 4 from all of this.
These are not some academic study results. These reflect reality. How is this saving the consumer money?
It is time to stop pretending. Democrats killed it. That’s what moronic politicians led by socialism do. And Elizabeth Warren is a senator who’s never taken a risk or made a payroll. She thinks she knows how to run a market better than the people who work in the industry.
These people like Warren lie to tear down builders, risk takers, and job creators. They tear them down so they can mislead you. They mislead you so they can scare you. They scare you so they can consolidate power – political and economic.
The blame for this will be laid elsewhere. They will make sure to blame billionaires, AI, capitalism and whatever other monster they can conjure up. Many on the Left are just flat out economically illiterate – others, like Warren, are also devious.
JetBlue/Spirit might have failed anyway. This is something we will never know. However, the current carcass of Spirit is knowable. And the fingers pointing at the cause are clearly seen once one stops pretending.