Investors expecting the market to go gaga over Spirit Airlines’ (Nasdaq:SAVE) IPO in the wake of last week’s LinkedIn (NYSE:LNKD) frenzy have been soredly.  After the IPO pricing was first delayed from Tuesday, Spirit scaled back the offering to 15.6 million shares at between $12-13.

The shares ended up pricing at only $12, and promptly opened for trading on Thursday at $11.35.

When the Florida-based airline filed with regulators last fall, it had planned to raise as much as $300 million by selling 20 million shares in the $14-$16 range. 

That’s a clear reversal of the thunderous debut of professional social networking company LinkedIn last Thursday, which emerged at $45 and nearly doubled on its first day of trading. 

But is LinkedIn’s well-received debut alone enough to make Spirit’s new shareholders worry?  Hardly.  Here are five reasons that, comparatively speaking, Spirit Airlines’ IPO will generate barely a ripple: 

1. The Airline Business Is Tough. All airlines face enormous fixed costs and margins so meager that one industry executive recently compared them to a charity. Last year, this capital-intensive and competitive business churned out only $16 billion profit on $565 billion in total revenue – a razor-thin 2.7% net profit margin.  Forecasts for this year predict margins of only 1.4%.
2. Being An Ultra-Low-Cost Carrier Is Even Tougher. The economy may be recovering and there has been a corresponding boost in air travel, but carriers are looking at capacity cuts later this year to offset rising costs. As an ultra-low cost carrier, Spirit sells low base fares that basically give passengers a seat and nothing more.  Other services – baggage and other “frills” are unbundled and if they are available, they cost extra.  The company caters to leisure travelers who want to save money flying on their vacations.  But the real money is in business travelers, not super-economy vacation flyers.
3. Fuel Price Volatility Is The Bane Of Everyone’s Existence. The Air Transport Association says if jet fuel prices hold over $3 a gallon throughout the rest of the year, it would add $15 billion to U.S. airlines’ fuel bill  — 38% higher than the $39 billion they paid in 2010.
4. Spirit Now Has A Lot Less Capital Than It Planned. Instead of the planned $300 million, Spirit now raised less than $200 million – more than 35% lower than expected.  Coincidentally, that’s about the share of its operating costs most airlines spend on fuel.
5. Is Spirit’s Value Proposition Bankable?  Offering cheap seats is smart if you can control operating expenses.  Low-cost leader Southwest (NYSE:LUV) cut its teeth on using cheap fares and few frills to nip at major carriers’ heels. It’s a business model that Spirit, JetBlue (Nasdaq:JBLU), Allegiant and Vision have embraced.  And perhaps Southwest’s evolution toward a more traditional business model with the acquisition of AirTran (NYSE:AAI) and more complex routes and multiple aircraft types will leave a crack of opportunity large enough for Spirit to slip into. Still, the challenge will not be an easy one.  

 As of this writing, Susan J. Aluise did not hold a position in any of the stocks mentioned here.