Spirit Airlines’ collapse will remove roughly 2 percent of price competitive capacity from the United States aviation market, an absorbable shift, said Frank Holmes, chief executive of U.S. Global Investors.
The Florida based budget carrier ceased operations on May 2, 2026, after a 34 year run, leaving roughly 17,000 workers without jobs and ending a second bankruptcy bid when a 500 million dollar federal bailout collapsed. Spirit cited a doubling of jet fuel costs following geopolitical disruption to Middle East oil supply.
Holmes, who runs the U.S. Global Jets airline exchange traded fund, said remaining discount carriers Frontier, JetBlue, and Allegiant should absorb Spirit’s routes without materially weakening competition. JetBlue and United Airlines are positioning to take share at the Fort Lauderdale hub, he said, while Frontier targets several other major markets that Spirit served.
“Its market share can be absorbed by the remaining low cost carriers fairly easily,” Holmes said in a written response shared this week.
He pushed back against widespread predictions of a sustained airfare spike. Any near term increase in fares, he argued, would likely fade once jet fuel prices ease, with customer pressure pulling discount competition back into the market. The timing of that fuel relief, he noted, remains unpredictable.
On the longer view, Holmes said Spirit’s failure has raised fresh questions about the viability of the ultra low cost carrier model itself. Legacy carriers have spent the past two years adding premium seat capacity, lie flat suites, and billions of dollars on lounge upgrades, drawing travellers willing to pay more for comfort.
Holmes added, however, that the migration toward premium travel could plateau or even reverse. Consumer behaviour, he said, has historically moved through economic cycles rather than along a one way path, meaning the perceived structural shift may yet prove cyclical.
Spirit had carried about 50,000 passengers a day in the period before its shutdown and held a 3.9 percent market share earlier in 2026, down from 5.1 percent the previous year. The collapse marks the first time in 25 years a major United States airline has gone out of business due to financial pressure.
