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 34-year-old airline that blazed a trail for ultralow-cost travel in North America with thousands of flights a week on its bright yellow planes said Saturday it was shutting down immediately in the face of soaring oil prices.
The closure underscores the challenges facing discount carriers, including Edmonton-based Flair Airlines, and how thin their margins can be, experts said.
“Spirit’s a warning shot for every thinly capitalized low-cost carrier in North America,” said Christopher Read, a former corporate development manager at Air Canada, though he stressed that Spirit may not represent the carrier in the coal mine.
“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 even 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, myriad route options and a clientele less sensitive to fare fluctuations.
“A full-service airline like an Air Canada or a WestJet has loyalty (programs), 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 expansion plans on growth in 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 versus none three years ago. 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. On longer routes, 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.
The weaker Canadian dollar relative to the greenback over the past few years had already tamped down Canadian demand for flights out of the U.S., Bryan said.
However, the sudden absence of a major aviation player — albeit one whose presence was diminished from earlier years — removes a check on fares along some routes. That supply vacuum carries implications for prices at United Airlines and Delta Air Lines — long-standing partners of Air Canada and WestJet, respectively, whose customers frequently fly on those U.S. carriers after booking a trip through one of Canada’s two largest airlines.
“Over the short term, you might see an increase,” Read said.
“Then again, it’s very difficult to isolate that right now, because jet fuel is very high — it may go higher,” he qualified. “The airline ecosystem is very, very complex.”
Round-trip economy fares between Canadian cities were up 20 per cent year-over-year at $396 on average in late April, according to travel search site Kayak. International fares rose 11 per cent to $1,252.
Budget airlines in Canada were struggling even before oil stopped flowing out of the Persian Gulf.
Between October 2023 and May 2025, four low-cost carriers disappeared from the skies, as Lynx Air and Canada Jetlines shut down and WestJet folded subsidiary Swoop and the recently acquired Sunwing Airlines into its main-line service.
Canada is a noted graveyard for discount carriers. At least six foundered here between 1995 and 2015: Greyhound Air, Roots Air, Air Canada’s Zip, Jetsgo, Zoom Airlines and CanJet.
While the country’s biggest cities remain amply served, smaller destinations have fewer options, which can also result in higher prices and, when things go awry, stranded passengers.
This report by The Canadian Press was first published May 5, 2026.
