Spirit Airlines and the Future of Cheap Flights

This episode of Planet Money traces the dramatic arc of Spirit Airlines from its heyday as America's fastest-growing carrier to its current flirtation with liquidation and a potential government bailout, arguing that the budget airline's troubles represent far more than high fuel costs. Through interviews with former CEO Ben Baldanza and industry analysts, the episode reveals how legacy carriers like Delta, American, and United systematically dismantled Spirit's competitive advantage through a three-pronged strategy of copying its bare-bones model, weaponizing loyalty programs, and benefiting from broader economic pressures on low-income consumers. The conversation captures both the intellectual appeal of Spirit's "pay for what you use" philosophy and the visceral hatred many passengers feel for the experience, ultimately asking what passengers lose if Spirit disappears.

4:07The Spirit Experience: A Flying Bus

In 2014, hosts Zoe Chace and Jacob Goldstein booked a $68.99 ticket from New York's LaGuardia to Fort Lauderdale to experience Spirit firsthand. The price was astonishingly low, but the hidden costs piled up immediately: $30 to pick seats, $3 for water, $50 to carry on a bag, $45 to check it. The plane itself was stripped of all amenities—seats that don't recline, ads plastered on overhead bins and tray tables, and legroom so tight that one passenger noted if the person in front put their seat back, "I'd be screwed." Fellow passenger Chris Petrizio leaned over and whispered, "This sucks."

The episode captures the paradox that defined Spirit: the plane was full of people, and the airline was adding routes and aircraft across the country, yet nearly everyone seemed to hate the experience. One passenger complained about paying for coffee and water, another called it "a total zoo," and Consumer Reports ranked Spirit dead last among all airlines—indeed, one of the lowest scores any company had ever received in their survey. Yet Spirit kept growing, adding planes and routes faster than any other American carrier.

7:13Ben Baldanza's Dollar General Philosophy

The episode's centerpiece is an interview with then-CEO Ben Baldanza, conducted at Spirit's unremarkable headquarters in a generic office park. Baldanza was a striking contrast to typical airline executives. He wore a short-sleeve shirt, kept the lights off in his office to save money (turning on a single bulb for the interview), and compared his airline not to competitors but to Dollar General. "We're not even Walmart," he said. "We're Dollar General. And we like being Dollar General because we save people lots of money."

Baldanza explained that he spent over 20 years at traditional carriers like American, Northwest, and Continental, where the goal was always "how can I get you to pay more for your ticket." Everything changed when he joined Spirit in 2005. The airline had been a mediocre bargain carrier trying to compete on price while also offering some amenities, and it wasn't working. In 2006, they decided to emulate Ryanair and AirAsia—build an airline that competed *only* on price, stripping away everything else. "Any sort of physical product or experience or Zagat score or anything like that," Baldanza said, was sacrificed to keep fares low.

The logic was straightforward: when you buy a ticket on most airlines, you pay for a ride plus a bundle of things you might not use—space, water, overhead bin access. On Spirit, you pay only for the ride. Baldanza pointed out that a competitor advertising "bags fly free" actually charges $50-60 more per ticket on average, and that carrying bags is expensive—requiring baggage handlers, belts, rental space, and insurance. "It is not free to carry bags," he argued. "So you either charge the people who use it, or you charge everybody whether they use it or don't. And we think it's fairer to charge customers for what they use."

11:50The Consumer Reports Clash and the Psychology of Cheap Flying

When confronted with Consumer Reports' devastating survey—Spirit received one of the lowest scores for any company ever rated—Baldanza was unapologetic. He called the survey "absolute bunk" because it never asked customers about price. "If you want to tell me that an airline that has more legroom and serves you more on board and has nicer lighting is a better airline than ours, but forget to say they charge $400 and we charge $99—why doesn't Consumer Reports put out a survey saying a Mercedes S-Class is better than a Ford Focus?" His point was that value depends on price, and Spirit was delivering something fundamentally different.

The episode explores the psychological tension this creates. Economists distinguish between "stated preferences" (what people say they want) and "revealed preferences" (what they actually choose). When polled, passengers say low fares matter most—a stated preference. And more people were buying Spirit tickets—a revealed preference. Yet they also hated the experience. Baldanza acknowledged this third category of flyer: people who know what they're getting into, fly Spirit for the deal, but hate themselves for it. He recalled a meeting where a colleague admitted flying Spirit constantly while also saying, "I hate them." When asked why, the answer was simple: "They're so cheap."

Flight attendant Barbara Dingas confirmed this pattern on the return flight. She said passengers regularly swear they'll never fly Spirit again, "but I guarantee you they'll be back." She recognized faces returning again and again. The episode concludes that "human desire is weird sometimes"—we pick the cheap option, feel dirty about it, and swear we'll never do it again, even though we probably will.

18:21The Revenge of the Legacy Carriers: Three Factors

Fast forward to the present, and Spirit's situation has reversed dramatically. Greg Rosalsky, the show's newsletter writer, explains that Spirit's troubles are part of a broader crisis among budget airlines, driven by what he calls "the revenge of the legacy carriers." He identifies three key factors.

First, the copycat strategy. Delta, American, and United watched Spirit and other budget airlines eat their lunch with lower upfront prices. Their response was Basic Economy—a stripped-down fare class that throws creature comforts out the window for passengers unwilling to pay for them. Rosalsky admits he books Basic Economy himself, giving "a little side eye" to first class but ultimately choosing cheaper fares. The result: Spirit's core value proposition—a low upfront price with fees for everything else—was no longer unique. Passengers could get essentially the same deal on a legacy carrier.

Second, loyalty programs. Economist Severin Borenstein from UC Berkeley explains that legacy carriers leveraged their massive scale to make loyalty programs far more powerful. Co-branded credit cards, corporate partnerships, and enhanced frequent flyer programs created incentives for consumers to ignore competitors. "In many cases," Borenstein says, "it was not changing the total offering at all, but simply giving one customer priority over another." Scale matters enormously here: when an airline flies everywhere you want to go, rewards are more useful, status feels worth chasing, and switching to a smaller carrier means losing accumulated benefits. This makes it hard for Spirit to compete even when its base fare is lower.

Third, economic pressures. Since the pandemic, costs have exploded across the industry—higher energy, materials, labor, and a pilot shortage. Budget airlines have a harder time absorbing these costs because their entire business model depends on offering dirt-cheap fares. Industry analyst Henry Harteveldt notes that when costs go up, fares must follow, and budget airlines lose their reason for existing. Meanwhile, demand from their core customers—low and middle-income Americans—has weakened due to inflation, higher interest rates, a cooling labor market, and growing inequality. Even travelers earning up to $150,000 a year are cutting back on leisure travel. As one source put it, "flying is optional; gas and groceries, not so much."

24:09The Bailout Question and What's at Stake

The episode arrives at the present moment: Spirit has filed for bankruptcy twice, faces possible liquidation, and is now seeking a government bailout. President Trump has mused about "buying" Spirit, suggesting the government could acquire it "virtually debt free," use its aircraft as assets, and sell it for a profit when oil prices drop. Transportation Secretary Sean Duffy has indicated Congress would need to get involved. The Wall Street Journal ran an editorial titled "A Dispiriting Airline Bailout."

This represents a dramatic reversal from just a few years ago, when the Biden administration's Department of Justice successfully blocked Spirit's proposed merger with JetBlue in federal court. There's debate about whether that decision was correct, especially given Spirit's current troubles. But one thing is clear: if Spirit disappears, the pressure on legacy carriers to keep fares low diminishes. The episode argues that Spirit may be hated, but a world without it would likely be worse for passengers—even those who never fly Spirit.

The episode also notes that Spirit has floated the idea of the government taking an ownership stake, similar to what the Trump administration did with U.S. Steel last year. This is unusual for American capitalism, but the administration seems open to it at the right price. As of the episode's recording, the bailout remains "TBD."

26:45Conclusion

What stays with the listener is the uncomfortable truth that Spirit's fate matters far beyond the airline itself. The episode makes a compelling case that budget airlines, for all their flaws, serve a crucial function: they pressure the entire industry to keep fares low and force legacy carriers to compete on price rather than just loyalty perks and premium experiences. Baldanza's Dollar General analogy was more than a clever soundbite—it captured a genuine economic insight about unbundling and consumer choice. Yet the episode also acknowledges that many passengers genuinely hate the experience, and that human psychology around value and self-respect is complicated. Spirit's rise and fall is a story about what happens when an industry's most disruptive player gets outmaneuvered, and what passengers lose when the cheapest option disappears.

Key takeaways

• Spirit Airlines went from America's fastest-growing carrier to near liquidation due to a three-pronged strategy by legacy carriers: copying its bare-bones model with Basic Economy, weaponizing loyalty programs that reward scale, and benefiting from economic pressures that squeezed budget travelers.
• Former CEO Ben Baldanza explicitly compared Spirit to Dollar General, arguing that unbundling services and charging only for what passengers use is fairer than bundling costs into higher base fares that everyone pays regardless of usage.
• Consumer Reports ranked Spirit among the worst companies ever rated, but Baldanza dismissed the survey for not factoring in price, arguing it's like comparing a Mercedes S-Class to a Ford Focus without mentioning the price difference.
• The episode identifies a third category of Spirit flyer beyond satisfied customers and angry ones: people who fly Spirit for the deal but hate themselves for it, revealing a tension between stated preferences (wanting comfort) and revealed preferences (choosing cheap).
• Legacy carriers' loyalty programs create a structural advantage that has nothing to do with service quality—they leverage network size to lock in customers through co-branded credit cards, corporate partnerships, and frequent flyer status.
• Economic pressures including inflation, higher interest rates, a pilot shortage, and rising material and labor costs have hit budget airlines harder because their entire model depends on offering the lowest possible fares.
• The Biden administration's successful blocking of Spirit's merger with JetBlue is now debated in light of Spirit's potential liquidation, which would reduce competitive pressure on legacy carriers and likely raise fares for all passengers.
• President Trump has suggested the government might buy Spirit, take an ownership stake, and later sell it for profit, though the transportation secretary says Congress would need to approve such a move.