The Spirit Airlines shutdown was not a surprise – it was an inevitability. On May 2, 2026, the budget carrier halted all flights and ceased operations for good, becoming the first major U.S. airline to go out of business in nearly 25 years.
Competing on price is a losing game because it is a race to the bottom. And competing on product or service is also very difficult, as almost every industry has become commoditized. What’s left? Customer experience – the one true differentiator in every industry. Spirit just proved the point.
What Led to the Spirit Airlines Shutdown
Spirit pioneered the ultra-low-cost model in the United States: a base fare that looked impossibly cheap, followed by charges for everything else. Carry-on bag? Extra fee. A soda? Extra fee. A snack? Extra fee. Need help from customer service? You guessed it. By the time passengers added everything up, Spirit was not always that cheap.
But the damage went deeper than nickel-and-diming. Spirit trained its customers to expect less – less comfort, less service, less humanity. When Frontier Airlines eliminated its telephone call center in 2022, I wrote at the time that it made no sense to remove the very method of contact that customers still prefer when they have a problem. Spirit operated with a similar philosophy: strip everything to the bare minimum and hope that rock-bottom pricing would make up the difference.
It did not. Spirit had not turned a profit since before the pandemic. The airline filed for bankruptcy twice, most recently in August 2025. And when soaring jet fuel prices – driven by the war in Iran – nearly doubled operating costs, Spirit had no cushion and no customer loyalty to fall back on. The airline shut down with almost no notice, stranding thousands of passengers and putting 17,000 employees out of work.
United Airlines Is Using the Opposite Strategy
While Spirit was busy subtracting, United Airlines is doing the opposite. As The Wall Street Journal reported, CEO Scott Kirby made a massive bet that United could reinvent itself as a premium airline – investing billions in lie-flat seats, Starlink Wi-Fi, seatback entertainment screens, and a mobile app that aviation insiders now consider the best in the business. Kirby keeps pressing his team to improve the experience at every touchpoint, repeating a mantra that has become a rallying cry inside United: “Your job is wow.”
Consider one small example. In United’s first-class cabin, the airline now stocks an entire counter full of snacks in the galley – at least a dozen choices – so passengers can help themselves whenever they want. Compare that to most airlines handing out a tiny bag of pretzels. That is what it looks like when an airline invests in the little things that add up to big impacts on the experience.
The results show it. According to United’s 2025 annual report, the airline achieved its highest-ever customer satisfaction scores, with Net Promoter Scores among on-time passengers reaching an all-time high and premium revenue growing 11% for the full year. The company’s Q1 2026 earnings release showed a record 87% of customers using digital check-in and 86% using the United app on travel day. These are not vanity metrics – they are signs of a company looking at every touchpoint and trying to make it better.
Customer Experience Is the One True Differentiator
Customer experience is about the little things, because the little things add up to big things. Think about all the touchpoints in an airline journey: booking, the terminal, boarding, the seat, the food, the crew, the Wi-Fi, the landing. Each one is an opportunity to either delight or disappoint.
As I wrote in Becoming The Experience Maker, competing on price or product just does not work as well anymore. The real differentiator in every industry is customer experience, and the best part is that it is delivered by human beings who are unique to every company. Spirit treated its people like costs to be cut. United treated its touchpoints as opportunities to earn loyalty and premium revenue.
Spirit’s story echoes another brand that failed to evolve. Toys R Us never moved beyond putting products on shelves. It could have become the ultimate destination for kids – a place to play, explore, and try out toys before buying them, much the way the LEGO Store operates today, drawing families in and converting them into buyers through hands-on experiences. Instead, Toys R Us competed on convenience and price against Amazon and lost. Spirit made the same mistake: it competed solely on price against airlines with deeper pockets, stronger brands, and better experiences.
Why the Spirit Airlines Shutdown Was Always Coming
Transportation Secretary Sean Duffy put it plainly: “Their model was not working,” he told NBC News. “They could not get the fiscal health.” But the model was not just broken financially; it was broken experientially. When a brand is built around being the cheapest option, it attracts the most price-sensitive customers – exactly the ones who will leave the moment someone else is cheaper or economic conditions shift.
When a brand is built around remarkable experiences, it creates customers who stay longer, spend more, and tell everyone about it. That kind of loyalty is a moat that competitors cannot easily cross, even when fuel prices spike or a recession hits. It is what Delta has done for years and what United is now doing aggressively.
Perhaps the most telling detail from Spirit’s final hours was its own website message: “All flights have been cancelled, and customer service is no longer available.” For a company that never invested much in customer service to begin with, it was a fitting epitaph.
Related: Why a “404 Error Page” is an Opportunity for an Experience
Lessons from the Spirit Airlines Shutdown for Every Business
No matter the industry, the lesson from Spirit’s collapse is universal. Cutting costs can save money up front, but it will eventually cost customers. Competing on price feels safe, but someone will always find a way to undercut the lowest fare. The businesses that survive and thrive are the ones that invest in customer experience – in the little moments, the human touches, and the thoughtful details that make customers feel valued.
Here’s a simple rule: If it’s good for your customers, then do it. If it’s not, find another way. Because the business decisions that are made with the customer in focus are usually the ones that end up being the best decisions for the business.
Competing on price is a loser’s game, and the Spirit Airlines shutdown is the ultimate proof.
Dan Gingiss is a top customer experience keynote speaker and strategist who works with corporations, associations, and franchises to create remarkable customer experiences. His engaging keynotes, hands-on workshops, and proven WISER™ methodology help organizations drive customer loyalty and business growth. Contact him directly to talk about an upcoming engagement.
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