Why Airline Prices Could Go Through the Roof

Spirit Airlines has long played a significant role in the airline industry. It served as a lower-budget alternative for travelers and was often referred to as the “bus with wings.” As the largest ultra-low-cost carrier in the U.S., its presence helped keep pricing competitive. As of this past weekend, however, it is no more. 

At first glance, this may not seem like a big deal. Especially if you typically fly with airlines like American or Southwest. Unfortunately, the removal of even one airline can have meaningful ripple effects across the industry. More competition generally helps keep prices lower. When a competitor disappears, that pressure goes away. 

So what happens now? 

People who used to fly Spirit will have to book with other airlines, and those tickets are usually more expensive. Some people will still travel and just pay more. Others may decide to travel less because it’s no longer affordable. 

Either way, there are now fewer seats available across the industry, but the same number of people wanting to travel. When that happens, prices tend to go up. 

It creates a classic supply and demand problem. While Spirit may have only accounted for roughly 5–7% of the market compared to about 18% for larger carriers like American Airlines, its absence still reduces overall capacity. Even a small decrease in supply, combined with steady or rising demand, can push ticket prices higher. It is the classic inflation model. 

And that’s only part of the problem. The problem that existed before Spirit Airlines went down is still a major problem today. 

Jet fuel jumped from $85–$90 per barrel to $150–$200 per barrel. That’s roughly a 70%–120% increase in a short period. Jet fuel is almost as big of an expense as employees.   

If ticket prices keep rising, it doesn’t just impact airlines. It can affect the entire travel industry. For example, hotels, rental cars, and entertainment, because people may start cutting back on trips. 

It will be interesting to see how this all plays out. Higher prices like this usually do not last forever, but in the meantime, it could put pressure on both travelers and airlines. The White House might regret who they let stay in business and what businesses that might go away. It is the “too big to fail model.” 

And it raises a bigger question: if things get worse, could the airline industry eventually need help to stay afloat? They are definitely too big to fail. 

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 Bob Brooks

Bob Brooks is a Financial Advisor and host of the Prudent Money Radio Show, heard every weekday from 4:30 PM - 5:00 PM on FM Radio 91.3 KDKR.