Budget airlines ask Washington for billions as fuel costs rise

A trade group representing low-cost airlines said Monday that it was asking the Trump administration for $2.5 billion to offset some of the cost of fuel, which has surged because of the war with Iran.

Jet fuel prices climbed to about $4.10 a gallon in North America at the end of last week, an increase of about 88% from the same time last year, according to industry data. That has led many airlines to raise ticket prices.

“Since February, jet fuel prices have increased by nearly 100% and are placing significant financial pressure on value airlines,” the trade group, the Association of Value Airlines, said in a statement. The group added that the $2.5 billion “liquidity pool” it was seeking would be “used exclusively to offset incremental fuel costs, as a necessary and targeted measure to stabilize operations and keep airfares affordable during this period of volatility.”

Separately, one of the trade group’s members, Spirit Airlines, is negotiating a loan of up to $500 million from the Trump administration. Under the developing deal, the government would have the right to purchase ownership stakes in the airline through financial instruments known as warrants. The government could end up owning as much as 90% of the company, which is in its second bankruptcy in two years.

At a bankruptcy court hearing last week, Spirit’s lawyer, Marshall Huebner of the law firm Davis Polk & Wardwell, confirmed the discussions with the government, stressing that time was of the essence. “The cash actually available to Spirit to fund ongoing operations is not going to last for very much longer,” he said.

Huebner also said he had begun having conversations with Spirit’s creditors about the proposed deal, which would give the government a more senior claim to Spirit’s assets than the loans the airline has taken from other lenders.

“The discussions are underway with all three of those groups that we hope will lead to consensus and support on all sides,” Huebner said.

A lawyer for one of the creditor groups, Michael Stamer of the law firm Akin & Gump, said it had received a copy of the proposed term sheet for the government deal.

A spokesperson for the Transportation Department referred questions to the White House about the proposal from the budget airlines trade group.

“The White House is aware of outreach that was made by a group of budget airlines to the Department of Transportation, and the administration continues to monitor the health of the U.S. aviation industry for passengers and airline employees,” Kush Desai, a White House spokesperson, said in a statement. He dismissed any discussion about the potential of such a deal.

The trade group -- which also represents Allegiant Air, Avelo Airlines, Frontier Airlines and Sun Country Airlines -- also has been seeking emergency measures from Congress. The group wants lawmakers to temporarily waive a 7.5% excise tax and $5.30 per-segment fee that airlines are required to pay per passenger. The charges are typically incorporated in the cost of an airline ticket and deposited into a federal fund that pays for aviation programs.

But it is unclear whether those efforts will gain traction.

The budget airlines’ group said Monday that the infusion of $2.5 billion would be “temporary government support to preserve vital industry competition,” likening it to the billions of dollars Congress approved for airlines during the coronavirus pandemic.

That relief, however, was directed to major airlines and low-cost carriers. This time, the major airlines have not joined the budget airlines’ request for relief.

There is also skepticism among lawmakers and government officials about whether all of the budget airlines need a cash infusion, according to people familiar with the discussions. While Spirit Airlines has filed for bankruptcy twice since late 2024, the other budget airlines do not appear to be in the same severe financial distress.

Even the deal the government is negotiating with Spirit has received a mixed reception within the Trump administration.

Commerce Secretary Howard Lutnick has been the main champion of the deal, according to people familiar with the negotiations. But Transportation Secretary Sean Duffy has publicly expressed concern about whether the Spirit deal would be a good investment.

“What we don’t want to do is put good money after bad, and there’s been a lot of money thrown at Spirit, and they haven’t found their way into profitability,” Duffy told Reuters during an interview last week.

A representative for the Commerce Department did not immediately respond to a request for comment.

It is unclear whether the administration will be able to finalize a deal with Spirit without buy-in from Congress, where the idea of a bailout faces stiff headwinds from both political parties.

Last week, Sen. Ted Cruz, R-Texas, chair of the committee that oversees aviation, called the rescue effort “an absolutely TERRIBLE idea.” Sen. Elizabeth Warren, D-Mass., criticized the administration for attempting to orchestrate a bailout when “Donald Trump’s war with Iran caused the sky-high fuel prices that finally did Spirit Airlines in.”

“What do the American people get out of this taxpayer bailout?” she said.

There are vanishingly few scenarios in which the administration would be able to circumvent lawmakers to make a deal with Spirit, according to experts. One option under consideration, according to the people familiar with the negotiations, is for the president to invoke the Defense Production Act. However, doing so would require the president to make the determination that bailing out Spirit is in the national security interests of the United States.

This article originally appeared in The New York Times.

Copyright 2026 The New York Times Company