Collapse of Spirit Airlines a ‘warning’ for budget carriers in Canada

Did you have a trip with Spirit Airlines booked and are now wondering what to do? CTV Windsor’s Travis Fortnum sums it up for you.

MONTREAL — The demise of Spirit Airlines in the U.S. serves as a warning to smaller carriers north of the border that remain beleaguered by high fuel costs and low demand for travel to America.

After two previous bankruptcies, the ultralow-cost airline that once operated hundreds of daily flights on its bright yellow planes and employed 17,000 workers said Saturday it was shutting down immediately in the face of soaring oil prices.

The closure shows how thin the margins can be for discount carriers such as Edmonton-based Flair Airlines, former Air Canada finance executive Christopher Read said.

“Spirit’s a warning shot for every thinly capitalized low-cost carrier in North America,” he said.

“Flair is not Spirit. But the pressures between the two rhyme.”

The high jet fuel prices caused by the effective closure of the Strait of Hormuz following the U.S.-Israeli attack on Iran in late February hit budget airlines much harder than large legacy carriers, since fuel represents a higher proportion of the former’s costs.

They also enjoy fewer buffers in the form of higher-margin business travellers, a myriad of route options and a clientele less sensitive to fare fluctuations.

“A full-service airline like an Air Canada or a WestJet has loyalty, premium cabins, cargo, corporate traffic, a stronger balance sheet,” Read said. “Flair has fewer shock absorbers.”

Flair said airlines across the board face similar hurdles, “including rising fuel costs that are affecting the industry broadly.”

“This is not about one business model over another, but a reflection of wider geopolitical and economic factors,” spokeswoman Kim Bowie said in an email.

Flair as well as premium value carrier Porter Airlines — Canada’s third-largest airline — also faced headwinds after staking growth plans on expansions into the U.S. shortly before many Canadians began to shun travel there in response to President Donald Trump’s tariffs and annexation threats.

Since 2025, both airlines have pivoted toward sun destinations beyond America. Flair now has routes to at least seven spots in Mexico and the Caribbean. Porter, which flew to zero destinations south of Florida a year ago, now offers winter flights to at least nine getaways, from Aruba to the Bahamas.

However, longer trips often yield lower margins for discount carriers, which depend on a high-frequency, shorter-haul model. Longer-haul routes see planes spend more time idling on the ground between voyages and fuel comprises a larger proportion of the operating expenses, eroding the financial advantage cheaper carriers gain from strict cost controls.

“The shorter the flight is ... the easier it is to run a low-cost carrier,” said Kevin Bryan, an associate professor at the University of Toronto’s Rotman School of Management.

“It’s not a great time to be an airline that’s in a little bit of financial trouble,” he added.

For Canadian passengers, the direct impact of Spirit’s disappearance is minimal.

The airline did not fly to Canada or to most airports that sit near the border — Plattsburgh, Niagara Falls and Buffalo in New York and Bellingham in Washington, for example. But experts say some Ontarians will miss the option of cheaper Spirit flights to sun destinations out of Detroit.

This report by The Canadian Press was first published May 5, 2026.

With a file from The Associated Press

Christopher Reynolds, The Canadian Press