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The news that Spirit Airlines has declared Chapter 11 bankruptcy came as no surprise to the travel industry. The budget airline, which previously offered low fares but charged for soft drinks, carry-on bags and more, had been staggering for some time and over the summer, had made drastic changes to its business model – without success.
CBS News notes, “Spirit's costs, especially for labor, have risen. The biggest U.S. airlines have snagged some of Spirit's budget-conscious customers by offering their own brand of bare-bones tickets. And fares for U.S. leisure travel - Spirit's core business - have sagged because of a glut of new flights. The premium end of the air-travel market has surged while Spirit's traditional no-frills end has stagnated.”
Accordingly, travelers are now wondering whether to cancel their tickets and change to a more solvent airline; after all, Frontier, JetBlue and Southwest offer many of the same routes and have not yet shown financial difficulties.
CBS News also reported that Spirit has taken the highly unusual move of trimming its October-through-December schedule (a time for peak holiday tournament travel) by nearly 20 percent compared with the same period last year. It’s a move that ultimately is expected to help rival airlines more than it will boost Spirit. But, say experts, travel is unlikely to be affected either way – at least in the short term.
USA TODAY reported that Spirit has stated that it expects to maintain its flight operations through the bankruptcy proceedings, meaning that customers can book and fly without interruption.
Overall, passengers shouldn't worry too much about their travel plans or frequent flyer miles, at least not immediately.
"In the short term, it will be just smaller," Robert W. Mann Jr., a former airline executive officer and current president of R. W. Mann and Co., an independent airline consultancy, told USA TODAY. "If [your flight were] canceled or [you] had to be rebooked, you’d have already gotten that notice."
At the same time, bankruptcy makes people uneasy, and could send travelers scurrying to other airlines that have not shown problems – even though a Chapter 11 declaration is not the same as an announcement of impending closure.
In fact, many of today’s flyers, particularly Millennials, who are the parents with children in travel sports programs, have only been traveling for a limited number of years. They have not seen the various changes that went on throughout the last few decades.
CBS News adds, “U.S. airline bankruptcies were common in the 1990s and 2000s, as airlines struggled with fierce competition, high labor costs and sudden spikes in the price of jet fuel. PanAm, TWA, Northwest, Continental, United and Delta were swept up. Some liquidated, while others used favorable laws to renegotiate debts such as aircraft leases and keep flying. The last bankruptcy by a major U.S. carrier ended when American Airlines emerged from Chapter 11 protection and simultaneously merged with US Airways in December 2013.”
Something that might change as a result of the bankruptcy announcement is interest in travel insurance, as well as a hard look at which credit cards will provide money back on cancelled flights – even if an airline is unable to do so.
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