Why Are Budget Airlines In US Asking For Billions Of Dollars From Trump Administration

Last Updated:April 28, 2026, 08:21 IST

Industry data shows jet fuel prices in North America surged to about $4.10 per gallon by the end of last week, marking an 88 percent increase compared to the same period last year.

Low-cost airlines in the United States are seeking financial relief as soaring fuel prices, driven by the war with Iran, continue to strain operations. A trade body representing budget carriers said on Monday it has requested $2.5 billion from the Trump administration to help offset rising jet fuel costs.

Industry data shows jet fuel prices in North America surged to about $4.10 per gallon by the end of last week, marking an 88 percent increase compared to the same period last year. The spike has pushed airlines to increase ticket fares.

“Since February, jet fuel prices have increased by nearly 100 percent and are placing significant financial pressure on value airlines," the trade group, the Association of Value Airlines, said in a statement, The New York Times reported.

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."

At the same time, one of its members, Spirit Airlines, is in talks with the Trump administration for a separate loan arrangement of up to $500 million. The proposed deal could allow the government to acquire a substantial ownership stake in the airline through warrants, potentially reaching as much as 90 percent.

Spirit is currently undergoing its second bankruptcy process in two years.

During a bankruptcy court hearing last week, Spirit’s lawyer, Marshall Huebner of Davis Polk & Wardwell, confirmed ongoing discussions with the government and underscored the urgency of the situation.

“The cash actually available to Spirit to fund ongoing operations is not going to last for very much longer," he said. Huebner also noted that talks have begun with the airline’s creditors regarding the structure of the potential agreement, which could give the government priority over existing lenders in claims on assets.

“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 representing one creditor group, Michael Stamer of Akin & Gump, said they had reviewed the proposed term sheet for the government deal.

Meanwhile, the Department of Transportation directed queries on the proposal to the White House. Responding to the outreach by budget airlines, a White House spokesperson said the administration is monitoring the situation.

“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 said, while downplaying the likelihood of a deal.

The trade group, which also includes Allegiant Air, Avelo Airlines, Frontier Airlines and Sun Country Airlines, is simultaneously pushing for temporary tax relief from Congress. It has urged lawmakers to suspend a 7.5 percent excise tax and a $5.30 per-segment fee charged per passenger, which are typically built into ticket prices and contribute to federal aviation funding.

However, there is uncertainty over whether these demands will gain political support. The group has framed the $2.5 billion request as “temporary government support to preserve vital industry competition," drawing comparisons to pandemic-era airline aid approved by Congress.

Unlike during the COVID-19 crisis, major airlines have not backed the current request. Additionally, policymakers and officials have expressed doubts about whether all low-cost carriers require assistance, noting that while Spirit Airlines faces acute financial distress, others in the segment appear relatively stable.

Even within the administration, the proposed Spirit deal has drawn mixed reactions. Commerce Secretary Howard Lutnick is said to be backing the move, while Transportation Secretary Sean Duffy has raised concerns about its viability.

“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.

The Department of Commerce has not yet commented on the matter. The path to finalising any deal remains uncertain, particularly without congressional approval, where bipartisan resistance to a bailout is evident.

Senator Ted Cruz described the proposal as “an absolutely TERRIBLE idea," while Senator Elizabeth Warren criticised the administration’s approach.

“Donald Trump’s war with Iran caused the sky-high fuel prices that finally did Spirit Airlines in," she said, adding, “What do the American people get out of this taxpayer bailout?"

Experts say there are limited ways for the administration to proceed without lawmakers’ backing. One option under consideration is invoking the Defense Production Act, though that would require establishing that supporting Spirit Airlines is critical to national security.

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