The Points Guy founder Brian Kelly discusses how the Spirit Airlines bankruptcy could affect travel.
When Spirit Airlines filed for Chapter 11 bankruptcy protection, the carrier said passengers would still be able to travel as usual. But industry experts warn that financial challenges for airlines have already hampered operations and will continue to do so.
In an open letter to travelers on Monday, the budget airline said it had struck a deal with bondholders to reduce its total debt, provide increased financial flexibility and position it for “long-term success.”
The company expects to complete the bankruptcy process in the first three months of 2025. During the process, the company that holds the budget said it expects to “continue to operate its business as usual.”
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In a statement Monday, Spirit said guests will still be able to book and fly “without disruption.” This means travelers will still be able to use all their tickets, credits and loyalty points, according to the airline. The carrier also said customers can still take advantage of the company’s Free loyalty program, Saver$ Club benefits and credit card terms.
The company also pointed out that this process will not prevent holiday travel, either.
“We appreciate you continuing to choose Spirit for your travel needs. As we head into the holiday season and beyond, we look forward to welcoming you back soon,” the company said.
Travelers check in at the Spirit Airlines counter at Fort Lauderdale-Hollywood International Airport in Fort Lauderdale, Florida, on Oct. 24, 2023. (Eva Marie Uzcategui/Bloomberg via Getty Images/Getty Images)
The founder of The Points Guy, Brian Kelly, said that filing for bankruptcy does not mean the company is “closing up shop,” a message he believes Spirit is trying to convey to its customers.
“They need consumers to trust the airline,” Kelly told FOX Business. “They’re already struggling as it is today, so if people start booking other carriers, that’s going to cause a lot of trouble for the airline. And they obviously want to survive the process.”
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Despite confirmation from airlines, Kelly believes travelers will definitely feel the impact.
He pointed out that Spirit has already reduced various routes, announced plans to lay off pilots and sell planes.
Spirit Airlines expects to complete the trial in the first three months of 2025. (iStock / Stock)
In a filing with the Securities and Exchange Commission last month, the ultra-low-cost carrier said it has identified about $80 million in annual cost reductions it plans to implement next year.
This won’t affect holiday travel, but it could affect future 2025 travel plans, according to Kelly.
“What that means to the traveler is that if you book remotely with Spirit, there’s a good chance that your flight time will change dramatically or your flight will be canceled altogether,” he said.
Due to Department of Transportation‘s recently enacted the automatic refund law, which defines the circumstances in which airlines must issue refunds, passengers are entitled to compensation in the event of a cancellation, said Kelly.
But he warned that disruptions could still cause major headaches, “especially if cancellations happen close to departure when all other options are too expensive.”
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Kelly said Spirit’s survival is important, he said, to the health of the travel ecosystem.
“Whether you love Spirit or hate it, it’s great for the travel ecosystem and ultimately the fares are much lower today,” Kelly said, adding that fares today, when adjusted for inflation, are actually cheaper than in 2019.
“It’s because of carriers like Spirit,” he said.
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