How the collapse of Spirit Airlines is impacting travelers and the wider aviation industry

[0:00] Spirit Airlines has officially shut down. The low-cost airline went out of business this [0:05] weekend after 34 years. It's left members of the flying public in a tricky bind and the larger [0:11] industry with some serious questions. Stephanie Sy has our look at how we got here and what comes [0:16] next for consumers. Amna, on Saturday, the low-cost air carrier canceled all flights and announced [0:23] customer service was no longer available. 17,000 jobs are impacted and passengers are struggling [0:31] with how to go about their scheduled travel, leaving many stranded. It's unfortunate and they [0:37] definitely do need to be sued because people pay their money to be able to go where they want to go [0:43] and for you to cancel and not have no type of like backup resources for them or another way for them [0:48] to get to where they need to go is kind of like that's messed up. We got our flight canceled two [0:52] times. First time was yesterday and then they said to rebook the flight over again and then we did [0:59] rebooked it but then this morning when we got here there was like oh we canceled all the flights because [1:03] the Spirit shut them down. And when we get here there was a guy so calm posting some signs saying [1:10] that Spirit ain't working no more. So what what are we gonna do? There was ladies with kids on the floor. [1:21] All of this comes as jet fuel prices continue to soar due to the U.S. war with Iran. It was not the [1:28] only factor that contributed to Spirit's closure but it was an important one. For a closer look I'm [1:34] joined by Nick Ewan, editor-in-chief of The Point Sky. Nick thank you for joining the NewsHour. So [1:39] you heard from those frustrated air travelers. What is happening now for them who were stranded over the [1:45] weekend and for people who have booked flights with Spirit in the next few weeks? [1:48] Yeah if you were stranded or you do have a flight coming up Spirit has said that they are going to [1:54] automatically refund everyone who paid with a credit card or a debit card. But of course that [1:59] is only going to make you whole financially. Now you have to figure out what's going to happen with [2:03] my vacation or how do I get back from where I just traveled to. Many other airlines are offering [2:09] discounted fares or fare caps on routes that Spirit operated. So I definitely recommend exploring all [2:15] of those options calling airlines directly to see what they might be able to offer. But start online [2:20] and act quickly because some of these discounts are only for a limited time only apply to select [2:26] routes. So you definitely want to try to investigate before those discounted seats are all snapped up. It [2:32] was interesting Nick to see how major airlines including Delta, Frontier, and American almost [2:37] immediately started offering these discounted tickets to those passengers that were left in limbo on [2:43] Saturday. Are these airlines seeing this as a growth opportunity? [2:49] I definitely think some airlines are looking at it in that exact way. We saw JetBlue for example which [2:54] has a large presence at Fort Lauderdale International Airport here in Florida. They immediately announced a [3:00] number of new routes. I expect that other airlines are going to potentially look to step in and fill that [3:05] void. We've heard reports of people who had elite status with Spirit getting status matched or the [3:11] ability to match their status with other airlines. So there definitely is a potential opportunity here. [3:17] This does come at a cost because Spirit was a low cost airline. They typically drove the prices down [3:25] in the markets where they operated. Unfortunately, we do expect fares to rise now because Spirit is no [3:32] longer able to exert that downward pressure on fares. [3:35] As abrupt as the closure seemed, this had been sort of years in the making, multiple bankruptcies, [3:42] etc. Spirit said in its announcement this weekend that the sudden and sustained rise in fuel prices [3:49] in recent weeks left them with no alternative, Nick. But all weekend we also heard the Trump [3:54] administration blame the Biden administration for blocking that JetBlue Spirit merger from a few years [4:01] ago. What's the truth? The truth is somewhere in the middle. The jet fuel crisis definitely was the [4:07] proverbial straw that broke the camel's back in this instance. But Spirit had many issues dating back [4:14] years, really coming out of the pandemic. They were unable to really return to profitability. They [4:20] struggled with some high costs for engine issues, leasing costs. And then the jet fuel, which typically [4:26] makes up about a third of an airline's expenses. It's their second largest expense item behind labor. [4:32] But the big issue is that Spirit was really struggling to chart a path forward to be financially [4:37] successful. And even if they had merged with JetBlue, they were being absorbed into JetBlue. So Spirit [4:43] would not have existed in the way that it still was until last week. So a lot of factors, not one in [4:51] particular, but it definitely was the jet fuel piece that ultimately, I think, accelerated their inability to [4:58] operate. It seems like this is happening at a particularly tough time for air travelers. We're already facing the [5:04] prospect of rising ticket prices ahead of our summer vacations, especially for budget travelers. Nick, what options [5:12] are left? And are their business models more sustainable than Spirit's? It's a great question. We do still have some [5:19] other discount carriers, Frontier Airlines, Allegiant here in the US. There are many abroad as well. I would [5:26] say that those airlines are a little bit more at risk if this jet fuel crisis does sustain for many more [5:33] months to come, simply because consumers are so price conscious when they're looking at these budget [5:38] airlines, and they're more likely to be too sensitive to price changes. Airlines have to pass along these [5:46] costs somewhere. They want to minimize them as much as they can because of how elastic demand is for [5:52] airline tickets, where the price increases, demand typically drops. So airlines are going to be [5:58] really cautious. But if you have not booked your summer travel yet, now is the time to do so, because [6:03] unfortunately, we don't see this changing anytime soon. And even if the Stradivore moves open today, [6:09] we'd be talking weeks, if not months, before we see any relief in the form of lower ticket prices. [6:14] Hmm. Nick Ewan, editor-in-chief of The Points Guy joining us. Thank you, Nick. [6:19] Of course. Thanks for having me on.