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By Jasmine Laws
Reporter
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Low-fare airlines are facing an economic crisis as they struggle with rising fuel costs and mounting debt that threatens to put some of them out of business.
The struggles have led to a request of the Trump administration for $2.5 billion in federal support to "offset incremental fuel costs, as a necessary and targeted measure to stabilize operations and keep airfares affordable during this period of volatility," according to a statement shared with Newsweek.
White House spokesman Kush Desai told Newsweek that the White House was "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."
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He added that "unless an announcement is officially made by the administration, however, any discussion about federal policymaking should be regarded as baseless speculation."
The ask comes as jet fuel costs have soared since U.S. began strikes in Iran and as the closure of the Strait of Hormuz has led to surging oil prices that have climbed over 55 percent since the conflict began.
Fuel is an airline's highest cost, accounting for over 28 percent of expenses based on 2022 data, according to the International Air Transport Association. The Association of Value Airlines, the group that has made the request, says that jet fuel prices have increased by nearly 100 percent, while data from the Bureau of Transportation Statistics shows that jet fuel costs have increased by more 30 percent between February and March.
Those rising fuel costs could now be a tipping point for low-cost airlines as a number have struggled to compete with the larger legacy airlines in the U.S. since the COVID pandemic. Spirit Airlines has filed for bankruptcy several times in the past, most recently in August 2025. Without the government's help, these airlines say that their future could be in jeopardy.
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President Donald Trump has voiced concern about budget airlines experiencing financial difficulty in the past, suggesting the AVA's ask may have a lifeline. The president also recently suggested the administration is considering offering a lifeline to Spirit Airlines to help it avoid liquidation, and the government has also provided billion-dollar grants and loans to airlines in the past, including during the COVID pandemic.
The AVA consists of Spirit Airlines, Frontier, Allegiant Air, Avelo Airlines and Sun Country Airlines.
Avelo told Newsweek: "As the smallest and newest airline in the country, Avelo competes against significantly larger airlines who have unprecedented market dominance."
"Our focus on unserved and underserved airports gives millions of U.S. consumers low fare nonstop air service options they otherwise would not have," they added. "We have no specific comment on the report, but we emphatically agree that a healthy airline industry with strong competition is important to the U.S. economy, especially during this period of high fuel prices."
Frontier and Sun Country Airlines both declined to comment, pointing Newsweek to AVA's statement. Newsweek also contacted Allegiant Air and Spirit Airlines via email for comment.
While this group has asked for help, others have thus far stood firmly against filing for bankruptcy.
JetBlue CEO Joanna Geraghty said in an internal memo, seen by Bloomberg, that a bankruptcy filing was not an option for the airline, despite the fact that it has not recorded a full-year net profit since 2019. Instead, the company says it plans to improve operational efficiency and stop unprofitable routes, among other measures.
Some budget airlines are expected to update investors soon on the impact of higher jet fuel prices on their businesses, which will make the trouble these airlines are facing more clear.
Meanwhile, larger airlines—like United and American—have already reduced their full-year outlooks as the war in Iran continues, but have also reportedly been able to pass cost increases onto ticket fares.
Whether the White House fulfills the AVA request remains to be seen, though Trump's previous comments about Spirit Airlines suggest he could press his administration to intervene. Without federal support, these budget airlines could continue to struggle as jet fuel prices soar and volatility remains in the market.
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