Why the same airline model prints money in Europe and burns it in America

Same playbook, opposite P&L

Ryanair posted an 18% operating margin in its last fiscal year. Spirit Airlines hadn’t turned a profit since 2019. They ran the same business model.

Strip the plane to its bones. Charge for everything — bags, seats, water. Fly one aircraft type to keep maintenance cheap. Pack the seats tight. Sell tickets at prices that make legacy carriers look absurd.

That model made Ryanair the most profitable airline in Europe. It drove Spirit into Chapter 11 — US bankruptcy protection.

The difference isn’t about passengers. Americans aren’t pickier than Europeans. The difference is the market each airline operates in. Five structural things work in Ryanair’s favour that Spirit never had access to. Once you see them, Spirit’s collapse stops looking like a management failure and starts looking like physics.

The airport fee asymmetry

Every airline pays the airport to use its gates, runways, and terminals. These fees are a huge part of operating cost. And this is where the two markets diverge completely.

In Europe, airports compete for airlines. Ryanair walks into a regional airport — say, Bergamo outside Milan or Charleroi outside Brussels — and says: give us near-zero fees, or we’ll fly somewhere else. The airport needs Ryanair more than Ryanair needs the airport. So the airport cuts its fees to almost nothing. Some European airports have paid Ryanair to bring routes there, effectively making the fee negative.

In the US, airports can’t do this. Most US airports are funded by municipal bonds. The terms of those bonds — called bond covenants — require the airport to charge airlines enough to cover debt service. The airport literally cannot negotiate fees below a floor set by its creditors. Dallas Love Field can’t offer Spirit the deal that Charleroi offers Ryanair, even if it wanted to.

The result: Ryanair’s airport costs per passenger sit at roughly €3–4 at its cheapest bases. Spirit was paying approximately $8–12 per passenger at mid-tier US airports. That gap flows straight to the bottom line.

How legacy carriers fight back

When Spirit entered a route, the Big Three — American, Delta, United — had a playbook. They’d drop their basic economy fares to match Spirit’s price on that specific route, absorb the loss on that one flight, and wait. They could afford to bleed on one route because they made money on hundreds of others. Spirit couldn’t survive a fare war on its only product.

This is called selective fare matching, and it’s devastating to a carrier that only sells cheap seats. If Delta matches Spirit’s $49 fare on Fort Lauderdale to Atlanta, the passenger picks Delta — same price, frequent flyer miles, bigger network if something goes wrong.

The timing mattered too. Spirit tried to grow in a market where the legacy carriers were at peak strength, fresh off mergers that consolidated the US industry from nine major airlines to four. European legacy carriers tried this same playbook. But they were weaker. In the early 2000s, when Ryanair and easyJet were growing fastest, airlines like Alitalia, Olympic, and Sabena were going bankrupt themselves. They couldn’t fund a fare war. Lufthansa and Air France fought back eventually, but by then Ryanair had 200 million passengers a year and costs so low that matching its fares would mean selling below cost indefinitely.

Ryanair grew when its competitors were at their weakest.

Geography and the rail alternative

Pull up a map of Europe. Most major cities are 300 to 1,200 kilometres apart. Paris to London. Amsterdam to Frankfurt. Madrid to Barcelona. These are perfect distances for a low-cost carrier — too far to drive, close enough for a 90-minute flight with fast turnarounds.

But here’s the thing that actually helps Ryanair: rail competes on short-haul, and that pushes legacy carriers off the shortest routes. The Paris–London Eurostar, the Madrid–Barcelona AVE, the German ICE network — these trains absorbed the routes that legacy airlines used to fly. So Ryanair doesn’t compete head-to-head with Lufthansa on Frankfurt to Munich. The train took that fight. Ryanair gets the 2–3 hour flights where trains aren’t fast enough and legacies have pulled back.

The US has no equivalent. There’s Amtrak’s Northeast Corridor, and that’s about it. A New York to Washington flight still has airline competition because the train takes 3 hours and costs nearly as much. American, Delta, and United still fly these short hops. That means Spirit was competing with legacy carriers on routes that, in Europe, wouldn’t even have legacy service anymore.

The ancillary revenue ceiling

Spirit’s original edge was unbundling. In 2010, when they started charging for carry-on bags and removing seat-back screens, the legacy carriers sold all-inclusive tickets. Spirit could offer a $39 base fare because everything else cost extra. The total ticket price wasn’t always cheaper, but the headline number looked irresistible.

Then the Big Three copied the idea — partially. Starting around 2016, American, Delta, and United all launched basic economy fares. No seat selection. No changes. No overhead bin. Sound familiar? These fares weren’t as stripped-down as Spirit’s, but they were close enough. A $79 basic economy fare on Delta undercut Spirit’s actual value proposition. The passenger got a cheap fare and the safety net of a major airline’s network.

Ryanair doesn’t face this squeeze the same way. European legacy carriers have their own basic fares, but Ryanair’s cost base is so far below theirs — roughly 40% lower cost per seat-kilometre (what it costs to fly one seat one kilometre) than Lufthansa — that it can still undercut them and make money. Spirit’s cost advantage over the US Big Three was maybe 15–20%. Not enough cushion to survive when the other side starts copying your homework.

What this means for your next ticket

The US market is consolidating. With Spirit gone and Frontier merging or shrinking, the Big Three plus Southwest control roughly 80% of domestic seats. Fewer competitors means fewer pressure points on pricing.

The routes that feel it most are the ones Spirit dominated — Fort Lauderdale to anywhere, Las Vegas to mid-size cities, Orlando to the Northeast. These were routes where Spirit’s $49 fare forced everyone else to keep prices in check. Without that floor, fares on Fort Lauderdale to Philadelphia have already risen 20–30% year over year on some dates.

Breeze Airways is the interesting question mark. They fly a different low-cost model — secondary cities that the Big Three don’t serve at all, like Charleston to Hartford or Bentonville to Las Vegas. Instead of competing head-to-head, they avoid the fight entirely. Whether that’s sustainable depends on whether those thin routes generate enough demand to fill planes. Spirit proved you can’t out-cheap the Big Three on their turf. Breeze is betting the turf itself is the variable you change.

The ultra-low-cost model works fine. It just needs a market that lets it.