Spirit Airlines Unveils Value-Added Fare Options: Perks Included

Spirit Airlines Overhauls Business ModelSpirit Airlines Overhauls Business Model In a significant shift, Spirit Airlines is moving away from its budget carrier roots and introducing ticket bundles that include popular extras. Ticket Bundles * Go Big: Includes priority check-in, spacious seat, snacks, beverages, checked bag, carry-on bag, and free Wi-Fi. * Big Front: Economy seat with priority boarding, access to overhead bin space, and free checked bag. * Simply Go: Basic economy fare with airport check-in, standard seat, and carry-on bag. Challenges Faced by Spirit Spirit’s shift comes amid financial struggles: * Losses of nearly $2.4 billion since 2019. * Competition from larger carriers with both premium and budget fares. * Excess domestic flight capacity leading to price cuts. * Lack of profitable international long-haul business. * Grounding of aircraft due to engine inspections. * Looming debt payment and aircraft shortage. Adapting to the Market Spirit’s new bundles aim to attract travelers who may have previously opted for a different airline, such as Frontier Airlines. The bundles also help Spirit compete with larger carriers’ budget offerings. Analyst Concerns Analysts at TD Cowen have downgraded Spirit’s shares, citing potential risks such as bankruptcy if it cannot renegotiate debt or return leased planes. Spirit’s announcement aims to demonstrate its commitment to offering affordable yet enhanced travel experiences to a broader range of customers. The success of the new fare bundles remains to be seen.

A Spirit Airlines Airbus 319 taxis at Manchester Boston Regional Airport, Friday, June 2, 2023, in Manchester, N.H. Spirit Airlines is shedding its history as a value-conscious budget carrier and will sell tickets that include some of its most popular extras in one bundle. (AP Photo/Charles Krupa, File)

Spirit Airlines is distancing itself from its history as a price-conscious budget carrier and will now sell tickets that include some of its most popular extras in bundles.

The Florida-based airline said Tuesday its most expensive ticket will be a “Go Big” package, which includes priority check-in, a more spacious seat, snacks and beverages, a checked bag, a carry-on bag and free Wi-Fi.

CEO Ted Christie said the changes “take low-fare travel to new heights.” They also highlight major problems with Spirit’s longstanding business model.

The airline with the bright yellow planes has not made a profit for the entire year since 2019. Since then, it has suffered a loss of almost $2.4 billion. Industry analysts are wondering whether Spirit will go bankrupt in the future.

Full-service carriers Delta and United account for an outsized share of the U.S. airline industry’s profits. They do this by catering to premium flyers, but also sell simple “basic economy” fares that rival Spirit, Frontier and Allegiant for budget travelers.

The budget carriers have suffered more than the giants from a glut of domestic flights, which has led to price cuts. Delta, United and American now have a booming international long-haul business that can offset weak pricing power at home. Spirit does not.

The budget carriers are trying to adapt. Frontier Airlines, which like Spirit has been losing money for more than four years, followed a pandemic-era move by the larger carriers and lowered fees for flight changes and cancellations for many customers this spring. Spirit quickly copied the move.

Spirit has other problems, including a looming debt payment of more than $1 billion and a shortage of aircraft because some of its jets are grounded for inspections and repairs to Pratt & Whitney engines. Spirit expects up to $200 million in compensation from the engine maker, but the situation is so dire that Spirit announced in April that it would lay off some pilots and delay deliveries of new jets.

Analysts at TD Cowen downgraded Spirit’s shares to “Sell” this month, saying that if Spirit can’t renegotiate its debt or return leased planes to lessors, a pre-packaged bankruptcy filing is possible.

Spirit’s announcement Tuesday is aimed at travelers who might not consider a budget airline.

Customers will be able to book one of four new ticket bundles starting August 16, meaning they won’t be available during the height of the summer holidays, but will be available during the busy Labor Day holiday.

“We listened to our guests and are excited to deliver what they want: elevated experience choices that are affordable and offer unmatched value,” Christie said in a statement from Spirit.

Spirit shares rose 5% in midday trading but have fallen more than 80% this year.

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