Spirit's troubles highlight a broader market trend where budget-conscious consumers cut back while the wealthy splurge on luxury. This pattern, once confined to goods, is now evident in services like travel, signaling a potential risk for other budget-focused businesses and an opportunity for luxury brands.

Established industries often operate like cartels with unwritten rules, such as avoiding aggressive marketing. New entrants gain a significant edge by deliberately violating these norms, forcing incumbents to react to a game they don't want to play. This creates differentiation beyond the core product or service.

When a large competitor matched Southwest's $13 discounted fare, Southwest countered by offering customers a choice: the $13 fare, or the original $26 fare with a complimentary bottle of liquor. Most business travelers chose the higher fare, turning a potential loss into a profitable marketing coup.

To win as a low-cost service provider, every decision must be optimized for operational efficiency from day one, like offshoring talent and using heavy automation. Simply lowering prices because a premium model failed is a losing strategy, as the underlying cost structure is fundamentally different.

Beyond low fares, Ryanair's long-term dominance stems from its financial strategy of investing when the industry is weak. The airline uses its large cash reserves to place massive, discounted aircraft orders with manufacturers like Boeing during slumps and opportunistically seizes market share when legacy carriers falter. This turns competitors' crises into major growth opportunities.

When Elon Musk publicly criticized Ryanair, the airline's CEO leveraged the conflict into a sales promotion. The resulting media attention and brand relevance led to a 2-3% increase in bookings, demonstrating how earned media from a public spat can be a direct and immediate revenue driver for a challenger brand.

For the first time, Delta's premium cabin sales, from just 30% of its seats, have surpassed coach sales. This shift provides tangible evidence of a "K-shaped" economic recovery, where a growing wealthy consumer base spends more on luxury while the mass market cuts back, forcing brands to cater to the profitable high end.

Overbooking isn't a flat algorithm. Business routes are overbooked more heavily due to flexible traveler schedules, while leisure routes with fixed plans (like a festival) are a huge risk to oversell, as almost everyone shows up. It's a lesson in understanding customer context to manage risk and revenue.

During the 2008 financial crisis, Backroads didn't just cut costs. They re-tooled the company to amplify their strengths, adding a third leader and a second van to trips. This premium shift improved their value proposition and led to higher profit margins post-recession, a counterintuitive move in a downturn.