The budget airline model in the U.S. is running out of runway

With Spirit Airlines gone from the skies, travelers now have fewer lower-cost options waiting in the wings during the busy summer season. Americans may need to get used to it, as the changes taking place in how we fly could become permanent.

For many years, airline efforts to create loyalty programs that keep customers sticking around could not compete with the one deciding factor for customers when purchasing a ticket: price. But the era of the low-cost carrier and ultra-low-cost carrier may now be irretrievably broken. 

“For decades, Americans have been voting with their wallets, showing that what they care about above all else is a cheaper fare,” said Kyle Potter, editor of Thrifty Traveler, a travel website and flight deal aggregator. Potter said the insatiable thirst for low fares is what created low-cost carriers like Spirit, Frontier, and others. “I think Spirit’s demise last month signals the start of a new era — maybe, a return to the so-called ‘Golden Age’ of travel … and one that many everyday flyers may not like,” Potter said. 

Recent results from leading carriers back-up Potter’s view. Delta Air Lines’ 2025 annual revenue hit an all-time high of $58.3 billion, yet the airline actually sold $1.1 billion less in economy tickets than the year prior. Premium ticket sales made up the difference, and 60% of Delta’s total revenue now comes from higher-margin lines like premium cabins, loyalty programs, and cargo.

Delta CEO Ed Bastian described a classic bifurcation (the so-called “K-shape”) of the airline market, with strength in the consumer sector is at the higher end of the curve, while the lower-end consumer is struggling. “Fares are driven by demand and the demand set that is growing the fastest is the premium sector,” he told CNBC earlier this year. “There is a limit to how much supply we can put in … our customer is willing to spend what it takes to sit up front,” he added.

United Airlines’ results tell a similar story, with $3.5 billion in adjusted net profit for 2025 — up 6% — and premium seat revenue jumping 11% for the full year. It expected record profits this year before war broke out in the Middle East, but has since said that demand remains strong, buoyed by customers who are less price-sensitive.

“Costs like jet fuel — but, perhaps more importantly, paying pilots — are too high to justify the lower fares. Airlines need scale in order to truly compete,” Potter said.

It’s a chicken-or-egg scenario for would-be Spirits. 

Jet fuel has put a big squeeze on all carriers in 2026, and hit smaller ones that don’t have the scale harder.  U.S. carriers spent 56.4% more on jet fuel in March than in February, according to data from the Department of Transportation released last month. They spent a total of $5.06 billion on fuel in March, up from $3.23 billion in February, and 30% more than…