Spirit Wants to be Delta-Lite

The airline filed for bankruptcy protection on Monday. A lot could happen, but for now, it claims it wants to be a cheaper version of a full-service airline.

Dear readers,

If Spirit follows its post-bankruptcy plan — and that’s a big “if,” considering other airlines may acquire some or all of it, or management simply could change strategies — Spirit soon may transform, or really revert, to what it looked like 20 years ago, before Bill Franke (and Ben Baldanza) molded it into an ultra-lost-cost machine. Spirit said in its filing there's a "lasting customer preference for premium leisure products," that its ‘hate-our-customers’ model no longer works, and that it has no choice but to find a new business model when it exits bankruptcy.

This customer preference thing should not surprise any regular readers; I’ve been writing about it for two years. And because I have harped on it so often (I’m adamant that premium is not a fad) I should be happy that Spirit is joining the trend. As you know, I hate nothing more than when airline executives are in denial about changing consumer preferences, and do nothing to address them.

But as I read Spirit’s go-forward plan, I thought to myself: are they sure? The airline intends to emerge from Ch. 11 by the first quarter of next year as roughly the same company, except its bondholders will have control instead of shareholders. The major difference will be the model, which essentially evokes a watered-down version of Delta’s.

It’s kind of weird. I know business has been bad for Spirit since the pandemic, with few signs of hope. But maybe because I have been brainwashed by Michael O'Leary (or his American imitator Barry Biffle), I'm not yet ready to give up on Spirit’s model, because no matter the industry, there’s a benefit in producing products at the lowest cost. For so long, cost control was this airline’s super power. Now it’s going to give that up?

We know why. Spirit wants to push revenue higher to offset its rising costs. But will that work? I’m not sure Spirit’s customers ever will see it for anything other than what it has been for the past 15 years. Spirit may find it tough, if not impossible, to win the increased revenue it covets.¹