How Spirit Airlines' collapse could shake up low-cost flying in Europe

The company has for many years been a price cutter in the US domestic market, with extremely low base prices and a business model built on ancillary revenue. But with rising costs, increased competition, and halted consolidation deals, the model has come under heavy pressure.

Now, much points to the effects spreading to Europe.

In the short term, it is mainly about indirect effects. When a major low-cost player disappears, competition decreases - something that historically tends to lead to higher prices.

Even though Ryanair, EasyJet, and Wizz Air are strong in Europe, they have simultaneously followed a similar development to Spirit: higher costs, squeezed margins, and an increasingly complex customer offering.

Spirit Airlines has represented the purest form of ultra low cost, where the flight ticket essentially only covers the transport itself. Revenue has instead come from baggage, seat selection, and other add-ons.

But the model has been challenged:

• Traditional airlines have launched their own low-cost products (“basic economy”)

• Low-cost carriers have in turn moved up the value chain

• The cost base has increased significantly, not least for fuel and staff

The development is also visible in Europe, where several players have gradually broadened their offerings and thereby also increased complexity.

Another clear lesson from Spirit's fall is the difficulty of standing alone. The company failed both with a planned deal with JetBlue and a previous agreement with Frontier Airlines.

In Europe, consolidation has so far been more limited - but the pressure is increasing.

At the same time, another structural change is underway: airlines want to take a larger share of the travel business. Just as Emirates is now investing in developing its tour operator business, several European players are working to increase revenues beyond the flight ticket itself.

This means:

• Greater focus on packaging

• More direct sales to customers

• Increased control over the entire travel experience

It is unlikely that Spirit's collapse will have an immediate equivalent in Europe. The major low-cost carriers are financially stronger and have greater economies of scale.

But the signal is clear:

The ultra low cost model is more vulnerable than it has long appeared to be. When costs rise and competition intensifies, it is no longer enough to be the cheapest.

The question is not if the model changes - but how quickly.