Transportation Secretary Sean Duffy said Saturday that the U.S. government does not need to bail out low-cost airlines that are seeking $2.5 billion in assistance to offset higher jet fuel costs, following Spirit Airlines’ collapse.
Transportation Secretary Sean Duffy said Saturday he does not believe the government needs to bail out low-cost airlines that have sought $2.5 billion in relief because of high jet fuel prices, following the collapse of Spirit Airlines.
“At this point, I don’t think it’s necessary. They do have access to cash. If they want to come to the U.S. government, we would be a lender of last resort. If they can find dollars in the private markets – I think that’s better for them,” Duffy said at a press conference at Newark airport.
Duffy also said some airlines viewed the prospect of a Spirit bailout as an opportunity to seek government money “not necessarily based on need, but based on opportunity.”
On Monday, a group of U.S. budget airlines, including Frontier and Avelo, said it had proposed exchanging warrants that could be converted into equity stakes for $2.5 billion in U.S. government assistance. The Association of Value Airlines said it asked the Trump administration to create a $2.5 billion liquidity pool that would be used exclusively to offset incremental fuel costs, calling it a targeted measure aimed at stabilizing operations and keeping airfares affordable during a period of volatility.
The group also asked Congress to suspend the 7.5% federal excise tax on airline tickets and the $5.30 per-segment tax, arguing that waiving the fees would offset roughly one-third of the incremental cost of higher jet fuel.
The request comes amid a sharp increase in jet fuel prices tied to the U.S.-Israeli war with Iran. Duffy spoke after Spirit’s collapse, which has been linked by multiple reports to higher fuel costs.
Executives from several low-cost carriers met with Duffy and Federal Aviation Administration Administrator Bryan Bedford in Washington last week to discuss the proposal.
Airlines for America, the trade group representing major U.S. passenger airlines, opposed a bailout for budget carriers, arguing that government intervention would disadvantage airlines that have already taken steps to cope with rising costs.
In response, the Association of Value Airlines said the fuel-price surge was an extraordinary external shock that disproportionately affects business models built around consistently low fares, and not the result of poor decision-making.
