Spirit Airlines is having trouble. And not just the kind of trouble that comes from being the airline equivalent of a crowded city bus, but the kind that involves bankruptcy filings and headlines that make customers like Aran Darling sweat bullets.

Darling, co-owner of a small fruit business called Froot Stand with his significant other Izzy de la Meme, booked a cheap red-eye from Los Angeles to New York for a work event. He buys avocados, tangerines, passion fruit, and exotic-sounding things like "Finger Limes" from growers near Ventura, California. A big client invited him to a food event in Manhattan - a networking goldmine. But as the days passed, Darling started seeing alarming headlines about Spirit's financial turbulence. Would his flight be canceled? Would Spirit go into liquidation? Sayonara, Spirit?

Darling checked online, called the carrier multiple times, and even shared his plight with Froot Stand's Instagram followers. On the day of the flight, LAX staffers had a running joke: "Who are you flying with?" "Spirit, gulp." They all chuckled.

Spirit isn't exactly beloved. Consumer surveys suggest it's one of the most - if not the most - hated airlines in the industry. The reason: its business model of "unbundling," "price partitioning," or, as cynical sorts call it, nickel-and-diming. Spirit charges a low base fare but then adds fees for carry-on bags, checked luggage, food, drinks, seat selection, and even a printed boarding pass. As Darling puts it, "They've got this thing where like, if you wanna breathe, you gotta pay extra."

For a time, the strategy worked. In 2014, Planet Money called Spirit "The Fastest Growing, Least Popular Airline In America." Then-CEO Ben Baldanza explained it with a retail analogy: "We're Dollar General." But these days, something about the Dollar General airline strategy isn't working. Not just Spirit - other budget airlines are struggling too. Even the actual Dollar General has been struggling.

High fuel prices - exacerbated by conflict in Iran - are part of the story, but not all of it. As we report in today's Planet Money newsletter, the big legacy airlines copied the budget airline playbook and outmaneuvered them with more enticing loyalty programs. One economist called those programs a powerful, even anti-competitive, weapon against smaller carriers.

Back in the 2010s, budget airlines like Spirit and Frontier looked like they were gaining ground on Delta and United. But then the legacy carriers introduced "basic economy" fares - mimicking Spirit's bare-bones experience with less legroom, no seat selection, no free food, and a travel experience best described as "character building." They also leveraged their scale to build superior loyalty programs: co-branded credit cards, corporate partnerships, and frequent flyer perks that made customers think twice before defecting to Spirit.

Severin Borenstein, an economist at UC Berkeley Haas School of Business, says these loyalty programs distort consumer shopping decisions. Instead of competing on the cost and experience of getting from A to B, there are weird incentives to stay loyal to big carriers. Budget airlines tried loyalty programs too, but Borenstein notes, "There are very few Spirit frequent flyer loyalists." Ouch.

Then the 2020s hit. Energy prices spiked after Russia's invasion of Ukraine, labor costs rose as pilots retired and new hires lagged, and price-sensitive consumers - Spirit's core market - pulled back as high inflation, higher interest rates, and a cooling labor market squeezed their budgets. Richer Americans, benefiting from surging asset markets, have been spending freely on travel, but the folks who used to fill Spirit's seats? Not so much.

As Harteveldt, the airline analyst, puts it: "When your costs go up, your fares have to go up. And if your costs go up too much, you're less able to offer the dirt cheap fares that your customers expect."

So Spirit's descent is a story of copycat competitors, punishing loyalty programs, rising costs, and an economy that's leaving its core customers behind. The Dollar General of the skies - and the actual Dollar General - are both losing altitude.