Why Do Low-cost Airlines Keep Failing?

Scott Kirby says low-cost airlines in the United States keep failing because they left the cheap airports that made the model work and then could not charge enough to cover their costs. New York airports now cost $52 per passenger. Spirit's average fare, before it liquidated, was $58. Paying $52 of a $58 fare, before fuel, airplanes, employees, or maintenance, does not work. He says big-airport costs are up something like 70% since before COVID, and that priced low-cost carriers out.

United did not set those airport fees. It added a basic economy fare and larger airplanes so it could match a low fare most of the time. A passenger may make the mistake of flying Spirit once, and will not do it twice. Spirit went bust because it could not charge as much as its costs.

Ryanair is the low-cost airline Kirby still calls successful, because it still flies to cheap airports. Southwest started at Oakland rather than San Francisco, and at Burbank and Ontario rather than Los Angeles. Ryanair skips Heathrow and Charles de Gaulle. The U.S. low-cost airlines left that pattern and flew into Chicago, Newark, San Francisco, and New York, where a $58 fare cannot cover a $52 airport charge.