What does Spirit Airlines' bankruptcy mean for you?
Spirit Airlines, the airline of choice for many budget travelers, filed for bankruptcy protection Monday, raising questions about the viability of no-frills airlines in the post-pandemic era, as consumer preferences shift toward more premium offerings.
Customers with plans to fly on the airline over Thanksgiving and beyond are also concerned about what the filing means for their upcoming trips, as well as airfares generally.
Spirit has entered into a restructuring agreement with its bondholders in order to reduce the airline's debt and provide it with increased financial flexibility, Spirit said in an open letter to customers Monday. The longterm aim, Spirit said, is to provide its guests "with enhanced travel experiences and greater value."
The airline, known for its bargain fares, said it expects to emerge from bankruptcy in the first quarter of 2025, "even better positioned to deliver the best value in the sky."
Industry experts attribute Spirit's financial woes in part to changing consumer preferences as they demand more amenities while flying.
"We can clearly see that consumer preferences have changed in favor of a more premium product, and the low-cost airlines are struggling," Jungho Suh, management professor at George Washington University School of Business told CBS MoneyWatch. "They don't want to see any added costs, they want an all-in, full-service offering."
What if I am booked on a Spirit flight?
Spirit plainly states that customers with existing reservations can still use their tickets. Their flight credits and loyalty points are also still valid, and can be redeemed as usual. Customers may also make new reservations for future travel.
"The most important thing to know is that you can continue to book and fly now and in the future," the airline said.
Additionally, Spirit customers can still benefit from the airline's Free Spirit loyalty program, as well as accrue and redeem Saver$ Club perks and credit card terms.
Schedule modifications
That said, industry experts advise customers to keep a close eye on their upcoming bookings. That includes updating their contact information so that the airline can reach them with modifications to their flights.
"Make sure your contact information is up to date, and keep an eagle eye on your reservations," Brian Kelly, founder of The Points Guy — a site focused on airline deals and travel rewards — told CBS MoneyWatch.
There's no need to panic, Kelly said, but the airline is expected to trim its schedule, which could result in your flight time changing, or being canceled.
"They're not going to stop flying tomorrow, but inevitably they're going to emerge an even smaller airline after this process, so that means there are going to be some hiccups with routes," he said.
Aviation industry consultant Robert Mann said some consumers who were accustomed to flying Spirit out of major airports may have to fly out of a smaller hub, as Spirit withdraws from major hubs served by legacy carriers.
"You could see that happen where Spirit decided to compete, and has now decided it wasn't such a good idea," he said.
What will happen to airfares?
Spirit and other low-cost carriers have helped depress airfares, even for consumers who don't fly on budget airlines.
"Whether you like them or not, having ultra low-cost carriers is good for our overall aviation ecosystem and good for consumers, even if you never buy them," Kelly said.
Spirit will emerge a smaller airline, which means there will be fewer low-cost flights on most routes, and airfares could rise across the board.
"The smaller Spirit is and the less routes they serve, the less pressure there will be on other airlines in those markets, resulting in overall higher fares," Kelly said. "This isn't good for consumers. There's no positive side to this."
