Labor Landscape
Spirit’s collapse is significant because ultra-low-cost carriers put downward pressure on pricing across the entire market, according to Shye Gilad, professor of the practice in the management area of Georgetown University’s McDonough School of Business.
Gilad points out that even travelers who never flew Spirit often benefited from its presence because legacy airlines had to compete against those fares. “In the short term, consumers should expect fewer deeply discounted tickets, especially on leisure routes. The days of routinely finding ultra-cheap base fares may become less common as capacity tightens and competition declines,’’ said Gilad, a former airline captain and flight training specialist.
Not only are passengers impacted by the loss of Spirit, but airline employees and small community airports who saw Spirit as a lifeline for business success are now scrambling to find other carriers to fill the void.
“For smaller community airports, the loss can be severe because many of these airports are heavily dependent on a single low-cost carrier to sustain passenger traffic, which generates revenue for vital services like parking concessions, rental cars, local tourism and airport employment,’’ said Gilad.
Last week, 25 workers at Arnold Palmer Regional Airport were laid off amid fallout from Spirit airlines’ abrupt closure. Two other employees have seen their hours cut and the Transportation Security Administration has given the Unity airport a 90-day notice that it is pulling out of the facility. Meanwhile, work is wrapping up on the first phase of a $22 million terminal expansion project, even thought there is currently no commercial carrier to use it.
Spirit announced May 2 that operations would end immediately, leaving Arnold Palmer Regional Airport without a commercial airline.
“Smaller airports already operate on thin margins and often compete against larger nearby hubs,’’ said Gilad. “If replacement service does not materialize quickly, some communities could see reduced connectivity and higher fares as travelers are pushed toward larger regional airports farther from home,’’ he added.
A proposed government bailout to help the cash-strapped airline failed. In fact, Airlines for America, the trade group for Alaska Airlines, American, Delta, JetBlue, and Southwest, opposed the bailout idea, saying that federal help would give the airline an unfair advantage.
Former Spirit employees have also filed a proposed class-action lawsuit against the airline, claiming workers were laid off without proper notice and are still owed pay and benefits after going out of business.
Spirit abruptly shut down operations May 2 leaving about 17,000 employees without jobs. The lawsuit, filed in U.S. Bankruptcy Court for the Southern District of New York by a group of six terminated employees from Florida, claims they were not given advance notice as required under the federal Worker Adjustment and Retraining Notification Act, known as the WARN Act.
Employees were notified of the airline’s shutdown through an email from CEO David Davis stating the Dania Beach-based budget airline had “decided to cease operations immediately,’’ according to the lawsuit. However, in its WARN notices filed with state agencies after the shutdown, Spirit said the reason it delayed the closing announcement and subsequent layoffs was because the airline was still negotiating with its leaders and the U.S. government for more financial help.
“The rising cost of fuel prices as a result of the conflict in Iran was a determining factor in Spirit’s decline,’’ according to Ahmed Andelghany, associate dean for research and professor of operation management at Embry-Riddle Aeronautical University.
Abdelghany said travelers will need to be ready to pay more without Spirit in the airline echosystem. “This low price was helping the consumer and forcing other airlines in many markets to match that low fare in some of their booking classes,’’ he said. “You are not losing capacity permanently, but what you are losing permanently is the lowest price point in the market.’’
Spirit Airlines planes are currently grounded and parked at desert storage facilities in Arizona, namely Phoenix Goodyear Airport and Pinal Airpark in Marana.
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