Oversized Planes Are Breaking Low-Cost Airlines

The Key Lesson Low-Cost Airlines Should Take Away From Spirit’s Fall

There is a lot of blame going around in the aftermath of the airline’s failure. Still, a deeper analysis suggests that another factor behind Spirit’s collapse may require attention from other low-cost airlines that are still flying.

The market has changed since Southwest first started flying for peanuts in the 1970s. America’s major network airlines have consolidated and grown. They’ve also become more sophisticated in their retail operations, borrowing best practices from low-cost competitors to grow ancillary revenue.

However, as a recent analysis by the industry data visualization firm Visual Analytics suggests, aircraft choice might also be putting the profitable low-cost model at risk.

Larger Planes Favor Seat Cost, But Not Trip Cost

As Visual Analytics CEO Courtney Miller explains, for years, the ultra-low-cost model has been optimized around packing as many seats as possible onto the largest narrowbody jets available, to drive down one key metric: the operating cost per seat. Lower seat costs allow airlines to offer lower airfares, but these fares are sustainable only if the aircraft are full, with ancillary fees to buffer a razor-thin margin. But the strategy is limited.

Whether an aircraft is flying full or empty, its trip costs are fixed by the aircraft’s operational demands. Flying a larger aircraft costs considerably more than flying a smaller one.

Flying a larger aircraft into markets with limited demand results in low passenger load factors, which translates into losses. Smaller aircraft can serve these same markets at a profit because the same number of passengers yields higher load factors that more than cover the aircraft’s trip costs.

“Airlines that once relied on a low-cost sweet-spot near 100 seats have since grown average aircraft sizes in search of lower seat costs to today’s most popular low-cost capacity – 240 seats. This 240% increase in seat gauge brought the lower seat costs desired, but at an ever-dwindling number of markets for which an aircraft that large could be deployed,” Miller writes in a post dedicated to what he describes as the seat cost vs trip cost paradox facing low-cost carriers, which points to considerably more market potential in developing new routes within the small-aircraft range. “Once consistently profitable, ultra-low-cost airlines are now dealing with market saturation from prior years of growth while being limited to the largest aircraft available to sustain that much-needed growth.”

As Miller notes, the largest narrowbodies have “run out of markets,” leaving airlines with fewer viable routes to deploy them. But there are plenty of opportunities in routes better suited to smaller aircraft.

Low-cost airlines have acquired large aircraft, which are now limiting their market growth as they focus on minimizing per-seat costs. This strategy favors larger aircraft, such as the Airbus A320 family, which Spirit selected for its fleet.

“Considering $100 in revenues per passenger (fare and ancillary fees included), a small narrowbody will start delivering profit in markets with only 106 passengers. This low break-even load factor is not uncommon, as the A321neo with 240 seats would break even at only 148 passengers at this fare,” Miller explains. “Yet, even as passenger demand increased along certain routes, the small narrowbody would remain more profitable than the large narrowbody until it filled every seat.” What is more, Miller suggests that operating smaller aircraft in larger markets could still prove more profitable than operating large aircraft, at the expense of turning some passengers away.

Instead, Miller sees an opportunity for growth by operating both large and small aircraft. “The small narrowbody is not a replacement for the large narrowbody, but rather a supplement to unlock new growth while allowing the large narrowbody to focus on the most profitable routes,” he writes.

This means that low-cost airlines would need to reconsider another successful pillar of their long-term model: the single-type fleet. There are distinct advantages in single-type operations, such as streamlined maintenance and labor costs. But as the narrowbody aircraft that have formed the backbone of single-type fleets have stretched, the economics are failing.

In short, the biggest planes are the most efficient—until they aren’t.

The Fuel Shock That Broke Spirit

The recent spike in fuel prices accelerated Spirit’s collapse. The airline’s restructuring plan assumed jet fuel prices of about $2.24 per gallon. Instead, prices have surged above $4 per gallon, nearly doubling one of the airline’s highest costs.

Fuel has always been a major expense for all airlines. Still, ultra-low-cost carriers are particularly exposed because they rely on high aircraft utilization to offset low fares that stimulate demand. They operate high-density seating configurations that add weight to aircraft, increasing fuel consumption.

But again, fuel consumption is also tied to aircraft size. Even with higher oil prices, airlines will have lower overall fuel spend operating Airbus A220s or Embraer 190s than with larger Airbus and Boeing narrowbody jets.

Spirit Shrunk, But Not In Time And Not Effectively

Spirit’s response to the financial crisis it faced was to shrink its fleet dramatically, to around 76 aircraft. The airline cut unprofitable routes, limiting its potential revenue, and focused on higher-revenue flying.

In doing so, the airline effectively admitted that its previous growth model—built on scale and density—no longer worked.

Even before the latest fuel spike, Spirit had already reduced flying and burned through significant cash reserves in early 2026.

But shrinking the fleet and network alone was not a viable long-term strategy. Pivoting to smaller aircraft and moving into secondary markets with little competition might have made a difference, but Spirit could not deploy such a strategy in time.

Southwest’s Problem: The Just-Right Plane That Hasn’t Arrived

Other low-cost airlines are facing their own oversized-aircraft challenges.

Southwest Airlines has been waiting on the Boeing 737 MAX 7—a smaller, more flexible aircraft that fits its network strategy for years. Boeing certification delays have forced the airline to operate larger aircraft at higher trip costs, which the lower per-seat costs cannot offset.

Unlike Spirit, Southwest wants smaller planes—but can’t get them. The airline has modified its core operating model, which has worked for decades, introducing assigned seating, premium seating and baggage fees. This has brought Southwest closer to the strategy used by major network carriers, helping it adapt to current market conditions, but at the expense of its core brand differentiator.

Boeing plans to certify the 737 MAX 7 this year, with deliveries beginning next year. Southwest will be keen to deploy them.

Breeze Is Betting Big On Smaller Aircraft

While ultra-low-cost carriers have moved toward larger, high-density aircraft, one carrier is taking the opposite approach.

Breeze Airways, a venture of David Neeleman, founder of JetBlue Airways, serves underserved city pairs, with 57 Airbus A220s and eight Embraer 190s. The airline’s focus has been to employ more flexible aircraft than those favored by other low-cost competitors.

Neeleman’s original concept for the airline emphasized the very advantage that Miller has highlighted: the ability to profitably connect smaller markets without relying on high passenger volumes. The market advantages are considerable.

“A lot of it is overflying hubs; where we can look at what the [daily passengers each way] PDEWs are and say ‘okay, well there’s 30 people to go between these two cities a day.’ If we lower the fare by half and can get them there twice as fast — which in some cases is even more important — instead of taking 4 hours to get you there, it’ll take an hour and 22 minutes to fly direct… People will go more often, and that’s been proven over and over again,” Neeleman told CrankyFlier in a 2020 interview, adding: “We have 500 routes we’re looking at, and there’s not one that I can think of that has another nonstop competitor on it…we’re very confident there’s a lot of opportunities.”

One opportunity Breeze snapped up quickly, following Spirit’s failure, was to sweep into Atlantic City, where Spirit had been the predominant carrier, adding four new routes.

Flying smaller aircraft may not address all the challenges facing established low-cost carriers, but it does open up new opportunities for competition. Spirit’s exit may provide some relief for the remaining U.S. airlines, which can now more comfortably increase fares in key markets. But Breeze seems best positioned to capitalize on markets that still lack adequate air service, offering U.S. flyers a refreshing alternative to hub connections—on less-crowded planes.