Michael GirdleyGirdley Enterprises, Girdley Enterprises, Inc. · Business builder and investor

The business mistake that killed Spirit

Name: The business mistake that killed Spirit
Uploaded: 2026-06-16T15:15:02+00:00
Duration: 1 min 37 s
Channel: Michael Girdley
Description: In this commentary, Michael Girdley explains why Spirit Airlines’ bankruptcy was not primarily caused by high fuel prices but by the erosion of its core…

16 Jun 2026 · 2 min

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1:37

In this commentary, Michael Girdley explains why Spirit Airlines’ bankruptcy was not primarily caused by high fuel prices but by the erosion of its core competitive advantages. For decades Spirit thrived by maintaining a large price gap—30‑45% cheaper than legacy carriers—and by generating over half of its revenue from ancillary fees such as baggage and snacks. The video outlines how legacy airlines (Delta, United, American) copied this model through basic‑economy fare buckets, shrinking Spirit’s price advantage to 10‑20% or less. Additionally, Spirit’s pre‑COVID cost advantage (about 6¢ per mile versus Delta’s ~10¢) disappeared after the pandemic as all carriers faced higher labor and operational costs, bringing Spirit’s cost per mile up to 9‑10¢, comparable to the majors. Stripped of both price and cost differentiation and lacking loyalty programs or premium services, Spirit found itself “stuck in the middle,” a position Girdley argues is fatal for businesses. The video concludes that the loss of a sustainable competitive edge, not fuel costs, led to Spirit’s demise.

Chapters

In the recent news, Spirit Airlines declared bankruptcy for the final time, and they're winding down and closing the business forever. The pundits are saying it's because of high fuel prices. Turns out that was just the final nail in the coffin. The reason it died is something else entirely. For decades, Spirit had won because of one number, which was the price gap, how much cheaper they were than the legacy carriers. And they were often 30 to 45% cheaper than Delta or American. Figured out they could make over 50% of their revenue from things that were not tickets, things like snacks and baggage fees. But it only took a few years after Spirit started to thrive for Delta, United, and American to figure out the model. And that model was basic economy. Those airlines would take a small percentage of their seats and offer them at dirt cheap fares to compete directly with Spirit. That meant that the price gap between Spirit and these guys dropped from 10 to 20% or less. While Spirit had no loyalty program, no first class seats, no lounges, no reason for people to come. Pre-COVID, Spirit had also had a cost advantage. Cost advantage. Paying 6 cents per mile on average to run their planes, while Delta had been closer to 10 cents. But post-COVID, the airlines basically had to rebuild themselves with new expensive labor that was harder to come by. And suddenly there wasn't much of a difference anymore. And Spirit would be 9 or 10 cents a mile while Delta was about the same. And so Spirit was suddenly an entire airline that had been built on being the absolute cheapest offering, and suddenly it wasn't. They were stuck in the middle and suddenly not the best at anything. And not being the best at anything is a place that businesses go to die. You can see it over and over again on my channel. And that's exactly what happened to Spirit. For more on this story, check out the full video I did of why Spirit died here on my channel or in the link below. Thank you.