U.S. Secretary of Transportation Sean Duffy speaks during a press conference at Terminal A of Newark Liberty International Airport (EWR) on Monday, November 24, 2025 in Newark, New Jersey, United States.
Victor J. Blue | Bloomberg | Getty Images
U.S. Transportation Secretary Sean Duffy said Saturday that he doesn’t think the government needs to bail out the low-cost carrier, which has asked the government for a $2.5 billion bailout in the wake of Spirit Airlines’ bankruptcy, citing soaring jet fuel prices.
“I don’t think there’s a need for that at this point. They have access to cash. If they want to go to the U.S. government, we’ll be the lender of last resort. If they can find dollars in the private market, I think that’s better for them,” Duffy said at a news conference at Newark Liberty International Airport in New Jersey.
He said some other airlines saw the prospect of a Spirit rescue as an opportunity to get funding “not necessarily based on need, but based on opportunity.”
On Monday, a group of U.S. low-cost airlines, including: frontier and Avello said it offered to exchange convertible warrants for $2.5 billion in stock for U.S. government support.
The Value Airlines Association confirmed it has asked President Donald Trump to create a $2.5 billion liquidity pool that will be used solely to offset incremental fuel costs “as a necessary and targeted measure to stabilize operations and keep airfares affordable during this period of uncertainty.”
They also asked Congress to suspend the 7.5% federal excise tax on airline tickets and the $5.30 per sector tax. Waiving the fee would offset about a third of the incremental cost of expensive jet fuel.
Soaring jet fuel prices double costs
The proposal highlights one of the unintended consequences of the US and Israel’s war against Iran. That’s because rising jet fuel prices have roughly doubled costs, squeezing profit margins and pushing smaller airlines closer to the brink.
Chief executives from several low-cost airlines met with Mr. Duffy and Federal Aviation Administration Administrator Brian Bedford in Washington last week to discuss the proposal.
The group calculated how much more it expects spending on jet fuel to be this year than previously expected, arriving at a figure of $2.5 billion.
Airlines for America, which represents the nation’s largest passenger airlines, opposed the bailout of low-cost carriers, saying, “Government intervention on behalf of these airlines would punish other airlines that have taken it upon themselves to deal with rising costs and reward those that have not made tough decisions. It is not a level playing field.”
The group added that in the long term, retaining companies that cannot earn their cost of capital will make it more difficult for other airlines to compete and attract private capital, negatively impacting competition and consumers.
The Value Airlines Association rejects Airlines for America’s criticism, saying government policy favors major airlines and saying, “The current rise in jet fuel prices is not the result of poor decision-making or lack of discipline on the part of value airlines. It is an extraordinary, out-of-control external shock that disproportionately impacts a business model built on consistently affordable fares for price-sensitive travelers.”
