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    "original_url": "https:\/\/www.nytimes.com\/2026\/09\/24\/opinion\/flights-airlines-spirit-loyalty-credit-cards.html?emc=edit_na_20260925&nl=breaking-news&segment_id=227095",
    "parsed_content": "AdvertisementSKIP ADVERTISEMENTOpinionSupported bySKIP ADVERTISEMENTGuest EssayAirline Credit Cards Are Messing Up the Whole IndustrySept. 24, 2026Credit...Illustration by Kristie Bailey\/The New York TimesListen \u00b7 7:54 min Share full articleBy Mark KahanMr. Kahan was vice chairman, executive vice president and general counsel of Spirit Airlines from 1996 to 2006.See more of our coverage in your search results.Encuentra m\u00e1s de nuestra cobertura en los resultados de b\u00fasqueda. Add The New York Times on GoogleAgrega The New York Times en Google 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 \u2014 a spike that ultimately proved fatal to Spirit\u2019s 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\u2019s ultralow-fare innovator and policeman.For me, it\u2019s personal. Spirit\u2019s 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\u2019s 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\u2019t 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\u2019s and dragged the whole industry\u2019s prices down with it.AdvertisementSKIP ADVERTISEMENTThe conventional account of Spirit\u2019s 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 JetBlue 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.Sign up for the Opinion Today newsletter Get expert analysis of the news and a guide to the big ideas shaping the world every weekday morning. Get it sent to your inbox.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 MileagePlus or American Express Delta SkyMiles, 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\u2019t match.AdvertisementSKIP ADVERTISEMENTWhen 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\u2019s jets or real estate, but by its MileagePlus program. Chase\u2019s credit card business was too valuable to let United go under.In June 2020, with air travel severely curtailed during the pandemic, United borrowed $6.8 billion against MileagePlus, a program valued by United at more than $20 billion. Delta borrowed $9 billion against its estimated $26 billion SkyMiles program, and American raised $10 billion, secured by its AAdvantage program, valued at up to $31.5 billion.Spirit had a credit card, too, a partnership with Bank of America. But the company was never important enough to Bank of America to warrant that kind of backstop. Even worse, Spirit\u2019s credit card processor, a unit of U.S. Bank, did the opposite, holding back 100 percent of the carrier\u2019s theoretical refund liability \u2014 a total it would never have paid \u2014 depriving it of working capital. That processor withheld $200 million from Spirit in 2024 and another $50 million in 2025. Those were steel nails in Spirit\u2019s coffin.This two-tiered aviation banking system is costing you money. It\u2019s the single biggest barrier to another national carrier emerging to challenge American, Delta and United with lower fares. It has nothing to do with how well an airline is run \u2014 Spirit ran circles around bigger rivals on cost discipline for decades \u2014 and everything to do with whether a bank views your airline as too big to fail. Spirit was too small to matter.Government policies allowed this system to take root. Regulators let the Big Three merge and consolidate over the decades and handed them scarce takeoff and landing slots for nothing.AdvertisementSKIP ADVERTISEMENTGanesh Sitaraman, a Vanderbilt law professor and the author of \u201cWhy Flying Is Miserable and How to Fix It,\u201d has argued that only a comprehensive overhaul of the domestic airline industry can fix the problem. He proposes regulating the airlines like public utilities \u2014 perhaps even imposing price controls \u2014 and outlawing loyalty programs of any kind.Having seen airline regulation from the inside at the Civil Aeronautics Board, I\u2019m a bit skeptical. The C.A.B. was a mess: In the 1970s, discount fares were largely outlawed, and a rigid, mileage-based fare formula was imposed in every city-pair market irrespective of cost. Deregulation was designed to enable more competition. It was never supposed to give major airlines free capital to build moats around their businesses. The remedy is to take away those moats, not to hand Washington back the authority to set fares and routes.Credit card points programs with \u201cfree\u201d consumer benefits are so entrenched in the way Americans travel and so integral to major financial institutions that lawmakers are unlikely to ban them. But they could prevent airlines from pledging airport slots and international route rights to lenders as collateral for private borrowing. They could also prevent the biggest carriers from using loyalty programs as collateral. Smaller airlines who don\u2019t have the same leverage should still be able to \u2014 including JetBlue, which is at risk of being driven into the arms of a bigger player, such as United.The passengers who lose out under the current rules are the ones Spirit used to serve \u2014 price-conscious leisure fliers who are less likely to carry those cards, and who now also pay more because Spirit is no more.Thirty years ago, when fares crept up, we could count on a hungry, growing Southwest to discipline the market. Today, under pressure from Wall Street, Southwest seems to be prioritizing higher fares and added fees. Under the current rules, no emergent carrier is both capable of challenging the oligopoly of the skies and willing to do so.The least Washington can do is stop pretending the problem doesn\u2019t exist.Source photographs by Getty Images.Mark Kahan was vice chairman of Spirit Airlines from 1996 to 2006 and has taught regulation and deregulation at American University\u2019since 2007.The Times is committed to publishing a diversity of letters to the editor. We\u2019d like to hear what you think about this or any of our articles. Here are some tips. And here\u2019s our email: letters@nytimes.com.Follow the New York Times Opinion section on Facebook, Instagram, TikTok, Bluesky, WhatsApp and Threads.AdvertisementSKIP ADVERTISEMENT",
    "published_at": "2026-09-25T02:26:06+00:00",
    "author_name": "Mark Kahan",
    "site_name": "The New York Times",
    "section": "Opinion",
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    "ai_headline": "Airline Credit Cards Are Messing Up the Whole Industry",
    "ai_simplified_title": "Mark Kahan Argues Airline Credit Cards Harm Industry Competition",
    "ai_excerpt": "A former Spirit Airlines executive argues that airline loyalty programs, backed by major banks, create an unfair financial advantage for large carriers, hindering competition and leading to higher fares. He contends this system was a key factor in Spirit Airlines' demise.",
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