Commentary
By Scott Hamilton
April 19, 2026, © Leeham News: News broke on Friday that US ultra low cost carrier (ULCC) Spirit Airlines wants a few hundred million dollars from the federal government to save it from liquidation.
The reason: the price of jet fuel more than doubled since Feb. 28 when Donald Trump directed the military to bomb Iran. Trump didn’t ask Congress for authority to commence this war. Israel simultaneously undertook its own bombing.
Iran responded by bombing Israel and just about every other country in the Middle East, and by attacking a US aircraft carrier and unarmed oil tankers. The Strait of Hormuz was closed, cutting off the supply of about 20% of the global oil.
As someone who began his aviation career with the first Midway Airlines in Chicago in 1979, I have a natural affinity for low fare carriers. I support new airlines and for the most part, I oppose industry consolidation that results in making the mega-carriers even bigger and stronger.
That said, the US government shouldn’t bail out Spirit.
Like the clock striking 12, the Trump Administration blamed the Biden Administration for Spirit’s current plight. Biden’s Justice Department rejected a merger between JetBlue and Spirit on anti-trust grounds, concluding that the combination would be anti-consumer.
I opposed the merger when it was proposed in 2022. Spirit was such a basket case even then that I concluded Spirit would drag JetBlue into bankruptcy. Before the weekend, JetBlue’s founder, David Neeleman (who left the airline years ago) opined that JetBlue would be in bankruptcy before the end of this year. The airline was struggling in 2022, and it was struggling before the current Iran War began.
JetBlue raises $500m
However, JetBlue just raised $500m in a debt deal secured by 22 Airbus A320s. With more than $1bn in liquidity at the end of last year, depleted at a rate we’ll only know when its first quarter financials are announced on April 28, the carrier may be okay for now.
As for Spirit, over-expansion, over-commitments for too many aircraft, bad management, bad service and bad strategies don’t support saving this airline. It should shut down and liquidate, with healthy airlines picking up the pieces.
According to reports, other US ULCCs and low cost carriers, including Frontier and Avelo airlines, and a few more, may also turn to the federal government for bailouts. Some of these carriers might deserve support and some don’t. The proper procedure is for this to be debated in Congress. If these airlines deserve federal support, and it’s not at all clear to me that they do, then what about Alaska Air Group, American Airlines, Delta Air Lines, Southwest Airlines and United Airlines who likewise have been badly hurt by the same dramatic hikes in jet fuel? Delta and United officials already said that on an annualized basis, the fuel price hikes will more than double their best earnings.
As for American, it’s been so mismanaged in recent years that one must analyze whether it would be deserving of a federal bailout.
Previous crises
One advantage I have of being an old fud is that I’ve been around long enough to see four life-threatening crises for the US airline industry. Next year will be my 50th year as a journalist covering the commercial aviation sector, a consultant to it, or employed by it.
I was around for the 1991 Persian Gulf War that began after Iraq invaded Kuwait, driving oil prices up sharply. US airline after US airline fell into bankruptcy. Most went out of business, including my beloved Midway Airlines. Eastern Airlines and Pan Am, two storied names, ceased operations. At the peak, 40% of the US airline capacity operated in bankruptcy.
In 2001, terrorists hijacked four airplanes belonging to American and United. Two were flown into the World Trade Center in New York, one into the Pentagon, and the fourth was dived into the ground outside Shanksville (PA) when passengers tried to storm the cockpit to retake command of the aircraft. The federal government grounded the industry for four days while implementing emergency security measures. Passenger traffic tanked under the fear of more terrorist tactics targeting airlines.
The Great Recession of 2008 was another existential threat to the airlines. Finally, the 2020-2022 COVID pandemic shut down airlines for an extended period.
Federal bailouts
Going with the more recent crisis first, Congress approved emergency loans to the airlines in 2020 following the lockdown because of COVID. This was Congressional action, voted upon, approved and signed by the White House. More than $50bn was provided to the airlines.
The 2001 terrorist attacks resulted in the debated and approved Air Transportation Stabilization Board (ATSB). This legislation established strict requirements to qualify. Airlines with poor profit track records, like LCCs Vanguard Airlines and Air South (among others) were rejected. America West Airlines, also an LCC patterned after Southwest Airlines, also was rejected. After revising its business plan, the ATSB approved it.
Believe it or not, United Airlines, which had two of its airplanes involved in the 9/11 attacks, was rejected. The ATSB concluded that its recent financial history and its business plan didn’t meet the requirements for a government bailout. United filed for bankruptcy, reorganized and continued afterwards.
I recount this history in detail in my third book, due to be published in September, called 50 Years in Commercial Aviation, Memories and Inside Stories.
The market determined which airlines would live or die in the 1991 Gulf War and Great Recession crises.
If the federal government wants to consider providing federal money—taxpayer dollars—to the ULCC/LCC beggars, then in fairness, all airlines should be eligible. The dramatic spike in jet fuel prices affect them all, not just the ones with poor management and dodgy business models. Yes, the Trump Administration created this problem. But there shouldn’t be a knee-jerk solution.
The template is there with the 2001 ATSB. Dust it off, amend it if need be, and debate it in Congress. That’s the law of the land. Executive Action doesn’t follow the law.
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