The situation: Spirit Airlines’ financial troubles exposed weaknesses in the ultra-low-cost airline model. The carrier has entered Chapter 11 bankruptcy protection twice in the past year, most recently in late August, and is aggressively cutting costs to rightsize operations.

This week, the airline said it would furlough about 1,800 flight attendants. It will cut its flight schedule by 25% in November and will end service next month in a dozen cities, including Albuquerque, New Mexico; Birmingham, Alabama; Chattanooga, Tennessee; Salt Lake City; San Diego; and Sacramento.

Rival carriers plan to fill the gap. United Airlines is adding flights in Florida, Las Vegas, Chicago, and Houston. Frontier Airlines will add at least 20 routes, with many lifting off from Spirit’s backyard near Fort Lauderdale.

Premium in focus: Discount carriers have faced pressure as bigger airlines like Delta, American, and United launched basic economy seats to lure budget-conscious travelers.

Now, with affluent consumers ramping up spending while lower-income households pull back, the industry is investing in perks like roomier premium seating to appeal to higher-spending business and leisure travelers. Even low-cost carriers are joining in.

• Frontier is adding first-class seats that draw higher fares.
• Southwest Airlines is overhauling its planes to introduce premium seats with more legroom as part of its plan to bolster revenues. Next year, the airline will end its longtime open-seat policy and offer new fare tiers.
• JetBlue, whose deal to acquire Spirit was blocked by a US judge last year, is also targeting premium leisure travelers by adding flights in higher-margin hubs like Fort Lauderdale and Los Angeles and upgrading its service with premium snacks and complimentary alcoholic beverages.

What’s at stake: For many households, low-cost carriers are the only affordable way to fly. The ultra low-cost model isn’t dead—carriers such as Allegiant and Sun Country Airlines are still profitable—but it’s in trouble.

Frontier reported a $70 million Q2 2025 loss and forecast more red ink for Q3, citing weak domestic demand and softening consumer appetite for travel. Should costs increase and middle- and lower-income consumers continue to cut back, bargain-hunting travelers may face much higher fares as airlines replace economy seats with pricier ones.

Our take: Low-cost carriers can adapt without shedding their identity.

• Offering value packages that include seat selection and a carry-on bag could help build consumer loyalty while aiding profit margins.
• Low-cost carriers can also follow JetBlue’s example and expand into loyalty collaborations with other airlines to add more revenue sources.

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