Guest Essay Sept. 24, 2026 Mark Kahan Mr. Kahan was vice chairman, executive vice president and general counsel of Spirit Airlines from 1996 to 2006. The more months that go by, the angrier I get about the death of Spirit Airlines, the discount carrier with the banana yellow planes that saved passengers billions of dollars over its turbulent lifetime. Spirit completed its last flight on May 2.

By August, U.S. airfares had risen 23.4 percent over the prior year. About one-third of those increases occurred before the war with Iran, which doubled the price of jet fuel — a spike that ultimately proved fatal to Spirit's plans to restructure. The bigger loss for airline passengers is that the major carriers will retain an unfair advantage in their financing that will make it difficult for any other airline to replace Spirit as the industry's ultralow-fare innovator and policeman.

For me, it's personal. Spirit's founder, Ned Homfeld, started his career in trucking but made the fateful decision to enter the airline business in my Washington law office in the fall of 1989. Shortly afterward, I became an airline executive.

As Spirit's vice chairman and general counsel, I was responsible for day-to-day operations until 2006. Spirit was one of the many start-ups (Midway, America West, People Express) made possible by the Airline Deregulation Act of 1978. Most didn't survive long, but Spirit soared.

In 2007, Spirit jolted the industry by pioneering unbundled fares: The base fare got you a seat and a carry-on, but you paid extra for checked bags and other options. Spirit reduced base fares significantly to compensate, and it spawned an entire class of ultralow-cost carriers, such as Frontier and Allegiant, whose growth eclipsed even Southwest's and dragged the whole industry's prices down with it. The conventional account of Spirit's death is a tale of serial bad luck: an order for up to 150 new Airbus jets placed months before Covid; a pilot shortage; engine defects that grounded many aircraft for a year; a federal judge who blocked the Jet Blue merger; and finally the Iran war.

All true. But Spirit survived three brushes with liquidation during my tenure, including a well-documented predatory pricing attack from Northwest Airlines at its fortress hub in Detroit. To understand what really happened, you must zero in on the greatest barrier to airline competition: loyalty programs.

You might see them as free travel. Major airlines see them as free money, which they can use both as a weapon against carriers like Spirit and as a cushion against shocks such as the Iran war. Look at your credit cards.

If you hold an airline card such as the Chase United Mileage Plus or American Express Delta Sky Miles, you are the fiscal foundation of the modern airline industry. The story starts in 1980, when American Airlines asked the government for approval to create a frequent flier program to reward its best customers. My bad: I approved it. (At the time, I was working for the Civil Aeronautics Board, the government agency charged with regulating the airline industry.) None of us at the C.

A. B. foresaw that this decision would eventually marry the biggest banks to the biggest airlines. Airlines sell miles to banks by the billions, and for some carriers, that revenue exceeds 10 percent of their top lines.

American Airlines, for one, sold $6.2 billion worth in 2025. But the money, however important, is almost beside the point. What matters more is that these programs function as collateral, giving the biggest airlines access to inexpensive capital that their smaller rivals can't match.

When a bleeding United needed an emergency infusion in the depths of the 2008 financial crisis, JPMorgan Chase found time on the very day that the illiquid insurer American International Group was nationalized to sign a $600 million advance to United. The loan was secured not by United's jets or real estate, but by its Mileage Plus program. Chase's credit card business was too v.