Analysis: How A U.S. Judge Brought Down America’s True Low-Fares Sector

"To those dedicated customers of Spirit, this one’s for you,” U.S. federal judge William Young wrote in his January 2024 decision that ended the proposed Spirit Airlines-JetBlue Airways merger. It took less than a year for those words to take on quite a different meaning: Florida-based no-frills Spirit filed for Chapter 11 bankruptcy protection in November.

This is not what Young had in mind. He maintained the decision—which sided with the US Justice Department (DOJ) conclusion that a merger would violate antitrust law—was aimed at preserving the ULCC market and low air fares in the US. But it should have been obvious at the time that the merger rejection decision would leave Spirit impossibly weak financially and unable to compete in a U.S. airline market that has changed substantially since Spirit launched.

During the antitrust trial in Boston, Spirit CEO Ted Christie repeatedly told the court that the carrier was in serious financial trouble and continued independence would not allow the carrier to be a “relevant” competitor to U.S. majors American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.

“The law of unintended consequences is in full effect,” Christie explained after the judge’s ruling while discussing the airline’s continued financial struggles with analysts.

Even in an industry with a voluminous history of Chapter 11 restructurings and failed companies, Spirit’s filing is surely one of the least surprising U.S. airline bankruptcies. The company has incurred a net loss for 11 straight quarters and carries a heavy debt burden.

Young wrote in his ruling that a merger with JetBlue—itself not faring well relative to its past performance—would “substantially lessen competition” because it would “eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline.”

But that innovation—the successful no-frills, “bare fares,” unbundled pricing model pioneered by the late Ben Baldanza during his 2006-2016 tenure as Spirit’s CEO—happened long ago. But it is far from unique in 2025. A significant cause of Spirit’s current struggles has been the broad adoption of its pricing practices by U.S. major airlines, including offering basic-economy seating, a baseline fare with add-on fees for bags, assigned seating and other services that they used to wrap into their fares. These days, it can be difficult to tell the difference between a North American LCC and a major or legacy carrier. That is even more the case because the ULCCs are increasingly adding bells and whistles to their cabin offerings to be able to compete with the “big boys.” Spirit executives are talking about a “reimagination” of its model that would include premium-seating and bundled product tiers that might include alcoholic drinks. Denver-based Frontier Airlines is also moving into premium offerings, including roomier seats at the front of the aircraft (for an extra price; no different from the majors) while newer entrants Avelo Airlines and Breeze Airways eschewed the no-frills concept from the start.

The big difference and pain point for ULCCs in attracting new customers away from the majors is that the no-frills airlines cannot compete with the extensive and international networks of the majors. They often can’t gain access to large numbers of gates at sought-after airports. They don’t offer lounges or loyalty member perks that extend to global partner airlines (they often do not have airline partners). These play into individual passenger and corporate buyer choices—and the majors know it.

Young and the DOJ engaged in wishful thinking and approached the proposed JetBlue-Spirit merger through the prism of an outdated view of the U.S. airline market. Even if Spirit moves through the Chapter 11 bankruptcy protection process and emerges as a restructured carrier, as is fully planned and anticipated, the carrier will look far different from the ULCC of the previous decade that Young thought he was preserving.

Spirit’s old and pioneering model is no longer available in the U.S. market, no matter Young’s intentions. And the entire ULCC model, created by independent pioneers with a view to shaking up the U.S. commercial air transport system, may be dead, too. Young’s “gift” to American ULCC fans last year looks increasingly like a curse this year.