Spirit Airlines has had a particularly bad year – navigating its first Chapter 11 proceedings, dealing with significant network and capacity cuts, plus a slowdown in domestic activity and increased competition. When the tide turns against you, it can really turn.

Now, the airline has announced it will seek a Chapter 11 bankruptcy protection for the second time in less than a year. This will be a major cause for concern and suggests the airline clearly felt it had no choice. But was Spirit the victim of some bad timing, flawed strategic choices, an earlier weak Chapter 11 process, or was there more to what is clearly a crisis for the airline?

Key points:

•  On Friday 29 August, Spirit Airlines announced it will seek a Chapter 11 bankruptcy protection for the second time in less than a year. 
• Aggressive growth left Spirit vulnerable: Between 2000 and 2014, Spirit’s average annual growth rate (AAGR) was 11%, rising to 18% from 2014–2019. This rapid expansion, especially post-pandemic, stretched its cash reserves thin just when demand fell sharply.
• Geographic concentration and rising competition: Spirit’s historic focus on East Coast markets helped it grow, but by 2016 its share there had dwindled amid increased competition from the likes of JetBlue and Southwest.
• Fragmented network strategy undermined efficiency: While Spirit expanded to serve 430 airport pairs by 2024 (from just 61 in 2010), most routes had low-frequency service -over half with less than daily flights -making operations less efficient and more susceptible to competition.
• Market slowdown and overexposure to leisure demand: With over 85% of its capacity allocated to domestic services, Spirit was particularly exposed to the market's current softness. 

Like any low-cost carrier (LCC), year-on-year growth is a vital part of the business model. Between 2000 and 2014 Spirit achieved steady - if aggressive - growth with an AAGR of 11%. From 2014 through to 2019, the last year unaffected by the pandemic, the airline’s AAGR had increased to an extremely bullish 18% per annum as new aircraft deliveries arrived and everything, at least from a growth perspective, was looking good for the carrier. Clearly the events of the pandemic impacted every airline, but for airlines like Spirit carrying such fleet expansion and with stretched cash reserves, timing could not have been worse.

By 2021, given that much of Spirit’s network was domestic, the airline had rebounded strongly and was back operating some 97% of its 2019 capacity. Building on that recovery, by 2024 the airline scheduled capacity growth of 20% against 2019, based on expansions of 20% in 2022 and 13% in 2023. In just two years, Spirit added a third more seats as the airline rode the wave of post-pandemic revenge spending. But that spend was exactly that, just a wave rather than a change of market structure.

Staying Local to Florida

Spirit has always been a Florida airline, initially with a focus on major East Coast markets, with three-quarters of its capacity operating between New York, New Jersey and Florida. The strong focus on three markets proved to be the foundation of the subsequent growth but also perhaps highlighted one of the challenges Spirit faced, as network expansion and entry into new markets resulted in these three core states’ capacity share falling to 28% by 2016.

Meanwhile, competition intensified. New market entrants like JetBlue and Southwest increased capacity between Florida and New York by 45% by 2016. It may have been that Spirit felt the need to diversify into new state markets as part of a defensive strategy, but at the same time it increased the network risk. From holding an 8% share of the Florida–New York capacity in 2000, Spirit saw its share fall to just 3% by 2009. Despite subsequent capacity reinvestment recovering its share to 7% by 2017, the loss of focus and market share at a key moment in its wider expansion may have been central to the situation now faced by the airline.

Struggling for Network Clarity

Expanding into new domestic markets was always going to be a challenge for Spirit, especially when that expansion encroached on legacy carriers’ hubs. But since 2011, the airline has been on a regular growth trajectory serving some 430 airport pairs in 2024 compared to just 61 in 2010 (and a very modest 38 in 2001). However, with such rapid growth came one of the greatest strategic challenges that many airlines face: should Spirit prioritise network breadth (destinations) or network depth (frequency)?

In the case of Spirit, it looks like they went for breadth rather than depth as the chart below highlights. Given that the average capacity per flight for Spirit in 2025 is 193 seats, then over half of the current network is served with less than daily frequencies - which for a low-cost airline seems a fragmented position. Nearly 75% of markets served operated with less than 150,000 seats per annum, while Spirit may have significant volumes of capacity at key airports the scale of network fragmentation is quite pronounced, leaving travellers with limited choice of flight timings and the airline vulnerable to competitive scheduling in many markets.

That network breadth and its implications, when in defensive mode, can be a major weakness. Spirit operates from 14 airports with more than one million seats per annum. By comparison, Frontier Airlines - a similarly sized low-cost carrier - has just 9 bases, with similar levels of capacity. The overlap is particularly pronounced in Orlando, with both carriers having very similar levels of capacity, creating a very competitive market dynamic.

Adding further woes to the challenges facing Spirit is its position in Las Vegas. Between 2020 and 2023 the airline increased capacity by over 150%, reaching 5.2 million seats a year. Although that growth has been scaled back in 2025, the airline is now the second largest airline in a market where demand is weakening. Visitor numbers to Las Vegas are down by more than 7% year-on-year, with June seeing a sharp decrease of 11%, leaving Spirit exposed in a softening market.

The current slowdown in demand in the US market, and particularly in the budget-conscious leisure segment, is hurting the airline which has over 85% of capacity allocated to domestic services - just when Spirit most needs growth in that segment. Layered on top of that market slowdown is increased competition from carriers such as Frontier which is set to receive 32 additional aircraft in 2026, compared with just three for Spirit. The market is likely to get tougher in the short-term, as increasing capacity fights for a smaller and increasingly price sensitive traveller.

Spirit’s latest Chapter 11 process will mean that Spirit will have to carefully navigate several key strategic long-term options, while keeping an eye on current revenues and some increasingly confident competitors. A second Chapter 11 undoubtedly raises question marks around the future of the airline, and no one wants to see any airline fail, especially one as large as Spirit. But unless a very compelling new strategy appears and the economic indicators change across the US domestic market, then that may just happen. In which case, would one less airline ease the broader concern of the US-based domestic airlines and their outlook for the next few years?