If Spirit Airlines gets a government bailout, bags should fly free

Spirit Airlines needs your help. Again.

The airline that charges you to print your boarding pass, to bring a carry-on bag on board, the one that has the audacity to sell a “bare” fare so stripped-down it barely includes the seat. Yes, that Spirit Airlines.

The troubled carrier has reportedly asked the Trump Administration for $360 million in emergency funding. Jet fuel prices have roughly doubled since the conflict in Iran began, pushing the already embattled discount airline closer to liquidation.

The government should say yes, but not without getting something in return.

We’ve been here before

This isn’t the airline industry’s first trip to the federal ATM. After Sept. 11, 2001, Congress handed carriers $5 billion in direct grants and $10 billion in loan guarantees. After COVID-19 grounded most air travel, the Payroll Support Program pushed more than $50 billion to U.S. airlines.

In exchange for that pandemic bailout, airlines agreed to maintain service levels, restrict buybacks, cap executive pay, and, crucially, eliminated most change and cancellation fees on most tickets. Air travelers benefited from it for years.

That’s the template: You want taxpayer money? Elliott’s Airline Bailout Principle says you give taxpayers something tangible.

The one concession Washington should require

Government aid to private companies should come with a public good attached, not some vague promise of preserving competition. It has to be real.

For Spirit, I’d like to propose that something: Bags should fly free.

If Spirit takes federal money, it should include the cost of one checked bag in every fare. No exceptions, no asterisks, and no “qualifying members only.” If you bought a ticket, your bag comes with it.

This may sound radical. But until last year, this was true of Southwest Airlines.

What Southwest changed

Southwest held out while every other major carrier charged for bags going back to 2008. Then, under pressure from activist investor Elliott Investment Management (no relation), it began charging for checked bags a year ago.

That decision left a gap in the market. No major U.S. carrier now includes a checked bag in its base fare. Spirit’s typical bag fee runs from $35 to $65 per checked item, depending on when you pay it. On a $70 fare to Fort Lauderdale, that doesn’t feel like a fee anymore. It’s more like a hidden fare.

Spirit could be the carrier that fills this gap. And here’s the competitive logic: In a market where every legacy carrier and every budget carrier charges separately for bags, a Spirit that doesn’t would be genuinely distinctive. It would have a reason to exist beyond being the cheapest result on Google Flights.

Should we let Spirit fail?

Yes, I know what the free-market faithful are saying. Let it fail. Let the market’s invisible hand steer it off the runway. 

Maybe. But the airline industry is not a free market. It’s a heavily regulated oligopoly running on federally funded airports, federal air traffic control, and, when things go really wrong, federal rescue packages. The free market in aviation is largely a rhetorical device deployed selectively, usually by people who’ve already collected their government subsidies.

It’s no surprise that Spirit, along with Frontier, Allegiant, Sun Country, and Avelo, recently wrote to Congress asking lawmakers to suspend the federal excise taxes on tickets, a move that would hand them a subsidy covering about one-third of the incremental cost of their higher jet fuel.

Letting Spirit disappear will just hand market share to the surviving discount airlines and the legacy carriers, who will raise prices accordingly. The passengers who actually need cheap fares—the ones Spirit was built to serve—will lose.

Spirit has already burned through one bankruptcy and is navigating a second one. Liquidation is a real possibility now. Losing Spirit, with fuel prices at these levels, would be a gift to every airline that’s still charging $45 to put a bag in the overhead bin.

What a real deal looks like

So here’s my proposal: Spirit gets a low-interest emergency loan. It repays it with interest, the way airlines did after 9/11. The government takes warrants in return, so taxpayers share the upside if Spirit recovers. And Spirit commits to including one checked bag in every fare for a minimum of five years.

Five years is long enough to matter and long enough to reshape customer expectations. And it’s long enough to make other carriers nervous.

Other airlines would protest. Good. Competition is supposed to be uncomfortable.

And the next time a carrier comes to Washington with its hat in hand, maybe lawmakers should ask the big question raised by Elliott’s Airline Bailout Principle: What are passengers going to get out of this?

If we’re carrying Spirit’s debt, Spirit can carry our bags.