We’ve gotten used to Donald Trump deflecting blame. So it is with Spirit Airlines, a discount carrier ultimately driven out of business because of spiking jet fuel prices caused by the war in Iran. Its demise is just the latest example of the dysfunction permeating the U.S. passenger airline industry.
But let’s first deal with the White House’s fairy tales about Spirit. Members of the administration are blaming a failed merger attempt in 2023, when JetBlue tried to buy Spirit. Had that merger taken place, they claim, everything would apparently be fine.
“The war was not the impetus,” Transportation Secretary Sean Duffy insisted. “Joe Biden and Pete Buttigieg, along with the Biden DOJ, decided they did not want that merger to take place.” Treasury Secretary Scott Bessent amplified this messaging by saying Spirit is “just more of the mess we inherited from the Biden administration.”
This argument is wrong. To begin with, it wasn’t the Biden administration that blocked the merger in the end. It was Judge William Young, appointed by none other than Ronald Reagan.
The administration and its allies live in a different reality.
Furthermore, the deal with JetBlue was illegal, because JetBlue planned to raise prices and cut seats. That’s a textbook antitrust violation, and it’s why then-Spirit CEO Ted Christie initially rejected JetBlue’s merger offer. Spirit instead wanted to merge with Frontier, a fellow discount carrier. But Spirit shareholders got greedy, and the company acquiesced to the JetBlue merger after it outbid Frontier $3.8 billion to $2.7 billion. Even after the deal was blocked, Frontier made a new merger offer to Spirit. Spirit management said no.
The administration and its allies live in a different reality, where the war with Iran isn’t happening happen and airline management teams are blameless stewards of the public interest.
So what did kill Spirit? There were both long-term and short-term causes. Spirit itself stated that the triggering event was “the sudden and sustained rise in fuel prices in recent weeks” — that is, since the start of the war with Iran. In April, the company announced a plan to emerge from Chapter 11 bankruptcy, but that plan projected jet fuel costing around $2.24 a gallon this year. Last week, it hit $4.51. That sealed the shutdown.
Then there’s the fact that 80% of our air travel industry is controlled by just four airlines: American, Delta, Southwest and United. These four have always wanted to squash low-fare airlines. The primary reason was obvious: A Massachusetts Institute of Technology study found that low-cost carriers, or LCCs, such as JetBlue reduce fares on new routes by 8% and ultra-low-cost carriers such as Spirit, Frontier and Allegiant reduce them by 21%. Over the weekend, Duffy said Spirit’s “model wasn’t working,” the exact words United Airlines CEO Scott Kirby has been publicly drumbeating about Spirit since 2024, while stating repeatedly that the ultra-low-cost carrier “model” had “failed.”
The big four airlines have increasingly focused on catering to their wealthiest customers. They have also used their monopoly power to thwart competition, harming the small guys. In some cases, that means predatory pricing. (My organization, the American Economic Liberties Project, has documented one such case, involving Southwest and Hawaiian Airlines in 2024.) It also includes not sharing gates and other critical airport infrastructure, especially at the majors’ biggest hubs, as well as leveraging frequent flyer programs and branded credit cards to keep customers captive.
Thanks to corporate concentration, we now have an airline competition problem.
Underlying all of this bad behavior is the Airline Deregulation Act of 1978. That law introduced unprecedented consolidation and instability to American air travel. To be clear, Spirit is not an anomaly. From 1938 to 1978, when the federal government oversaw routes, fares and service, there were virtually no airline bankruptcies, and just 13 mergers. Since 1978, we’ve seen 45 mergers and acquisitions and 215 bankruptcy filings, including countless shutdowns that have disrupted passengers, workers, and entire cities and regions nationwide.
Thanks to corporate concentration, we now have an airline competition problem. Last week, AELP published a paper showing that America’s airlines have splintered into a K-shaped industry: The big four airlines make money, and virtually everyone else loses money.
Soon there will be just 10 scheduled passenger airlines in America, the lowest total in a century. There have been only two new entrants — Avelo and Breeze — in the last 19 years. Under deregulation, the legacy big four carriers have used their hub-and-spoke systems to disenfranchise millions of Americans who do not have easy access to hubs, nonstop service, flight frequencies or low fares. Major cities have lost hubs due to mergers, including Cincinnati, Cleveland, Pittsburgh, Nashville and St. Louis.
Furthermore, three of the four biggest airlines — American, Delta and United — have effectively stopped competing with one another on price, a fact that is proven four times a year when the Department of Transportation publishes its latest Domestic Airfare Consumer Report. When routes are served only by any combination of those three airlines, we see the highest prices. The presence of even one ultra-low-cost carrier can drive down average fares on such routes. That’s why Spirit’s loss will be felt by Americans who never flew it.
In 2024, AELP offered new approaches to regulating the airline industry in our white paper “How to Fix Flying.” That means government oversight of routes, fares and service once again, with pricing aggregated nationwide by cost. Spirit’s shutdown is just the latest manifestation of a broken air transportation system that is vital to our national interests, yet is treated as a short-term investment by Wall Street and industry executives.
We can and should ignore the Trump administration when it misleads the public about Spirit’s collapse. But we should not pass up the chance to confront the realities of U.S. aviation and what it will take to rebuild an aviation system that works for all of us. If we don’t, we’ll see more airline bankruptcies — and flying will be the worse for it.
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