SCOTT SIMON, HOST:
Spirit Airlines is no more. The struggling ultra-low-cost carrier ceased operations overnight. That comes as the aviation industry faces stiff headwinds because of soaring jet fuel costs, forcing airlines to cut their schedules and hike fares. NPR transportation correspondent Joel Rose joins us. Joel, thanks so much for being with us.
JOEL ROSE, BYLINE: Hi, Scott.
SIMON: Let's begin with Spirit. Why'd they go out of business?
ROSE: High fuel costs certainly did not help. I mean, as you said, the whole industry has been dealing with a spike in the price of jet fuel since the beginning of the war in Iran, which has disrupted the supply of crude oil and jet fuel coming out of the Persian Gulf. That's driven up the price of jet fuel worldwide, even in the U.S., which is a net exporter of jet fuel. The price has nearly doubled in the past two months. That is putting pressure on all airlines, really. But in the case of Spirit, problems really ran much deeper than that.
SIMON: How so?
ROSE: Well, the airline has been in trouble for years. It was a pioneer of the ultra-low-cost business model, where airlines keep their fares way down by stripping away the amenities that travelers had previously taken for granted and then charging extra for them. That's not a model for everybody, but it did make flying accessible for a lot of people who otherwise could not afford it. And for a while, Spirit made money. But then the big legacy carriers created their own versions, they called basic economy fares, and Spirit had, you know, hit hard times. It tried to merge with a bigger airline, JetBlue, but the Justice Department sued to block the merger. Since then, Spirit has filed for bankruptcy twice.
In recent weeks, the airline sought a $500 million federal bailout from the Trump administration, but those talks failed to yield a deal. And finally, Spirit ran out of money. The airline announced early this morning that it has ceased operations after more than 30 years. Spirit says anyone who booked flights directly with the airline will automatically get a refund, though if you booked with a voucher or a credit, it is not clear yet if you're going to get compensation for that. And some other airlines have agreed to cap their fares for travelers who were holding tickets with Spirit.
SIMON: How about other U.S. airlines? What are they doing about the higher fuel prices?
ROSE: Well, airline CEOs have been asked a version of that question a lot on earnings calls over the last few weeks. Those higher costs are going to eat into their profits or make it harder for airlines to turn a profit at all this year, but there are some things that the airlines can do to manage the costs. I talked about this with Shye Gilad. He's a former airline pilot, now professor of management at Georgetown University.
SHYE GILAD: We see that they're cutting flights. They're raising prices. They're adjusting capacity on different routes. And they have very good capability to do that through technology. What it really comes down to is managing capacity to deal with this kind of volatility.
ROSE: And Gilad says airlines do have some levers they can pull for that.
SIMON: Like what?
ROSE: Well, they can cut flights. They can trim their schedules. The big legacy carriers can also change which planes they fly on a given route to manage their capacity. And all of the airlines are trying, to some extent, to pass higher fuel costs on to their customers in the form either of fare hikes or higher bag fees. And customers do seem to be willing to pay, at least so far. But U.S. airlines say they are watching demand very closely and that they'll be ready to make deeper cuts to flights later in the year if it makes sense to do that.
SIMON: Of course, Joel, what does this mean for people who are still planning summer travel?
ROSE: Nothing good. I mean, even if the U.S. and Israeli war with Iran were to stop tomorrow, oil prices are likely going to stay high for a while, and airlines are not going to be in a hurry to lower their fares back to prewar levels. Airline leaders have signaled they expect some of these price hikes to stick even into next year. So the advice I'm hearing is, don't wait. If you have not booked your summer tickets yet, just go ahead. It is not worth waiting to see if those prices come down.
SIMON: Thank you. NPR's Joel Rose.
ROSE: You're welcome. Transcript provided by NPR, Copyright NPR.
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