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Travelers are unlikely to see major disruptions as the Trump administration reportedly moves closer to a bailout of bankrupt Spirit Airlines, industry experts say.
Officials are discussing a roughly $500 million deal to help Spirit exit bankruptcy – an arrangement that could leave the federal government with up to a 90% stake in the low-cost carrier, Reuters reported.
For most Americans, the situation is not expected to affect summer travel plans, according to aviation consultant Mike Boyd.
“Travelers don’t have to worry,” Boyd told FOX Business, calling the situation a “sideshow” for the average flyer.
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However, Boyd noted there could be some uncertainty for passengers already booked on Spirit as the airline navigates the bankruptcy process.
Aviation expert and former National Transportation Safety Board (NTSB) investigator Mike Coffield told FOX Business that government intervention could ultimately lead to higher fares.
“It will raise fares, not lower them,” Coffield said, adding that a bailout could be unfair to other airlines. “They will also get capital at little risk, until they lose it all and the taxpayer money.”
Coffield, noting his role in drafting the Air Transportation Safety and System Stabilization Act after the Sept. 11, 2001, terror attacks, argued the government should “step in only in a national crisis or interest.”
Coffield also said that if Spirit were to shut down, other carriers – including American, Southwest, United, JetBlue and Allegiant – would likely quickly fill the gap and hire displaced workers.
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“If you can look historically, wherever there’s been an airline that stopped service, within six months most of all those people are rehired in their original jobs wearing different uniforms,” Coffield said.
Gary Leff, author of the aviation blog “View From the Wing,” said keeping Spirit afloat could “weaken” competitors like Frontier Airlines and JetBlue.
“Keeping Spirit Airlines alive weakens other airlines, though, especially Frontier Airlines – Spirit’s major ultra-low cost competitor – and JetBlue, their largest competitor at Fort Lauderdale,” he told FOX Business. “Once the government controls Spirit Airlines, that even raises safety concerns because the government both becomes the safety regulator and owner of the airline they’re regulating.”
Meanwhile, Clint Henderson, travel expert at “The Points Guy,” said consumers would “likely benefit” if Spirit remains in operation.
“This would be good for keeping prices lower as it would protect a low-cost carrier, so the news is potentially good news for consumers… at least for now,” Henderson told FOX Business. “Everyone loves to hate Spirit until they leave a market and fares go up.”
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The proposed financing would likely begin as a loan to keep Spirit operating during bankruptcy and convert into longer-term funding after it exits.
A lawyer for the airline confirmed Thursday that it is in advanced discussions with federal officials, Reuters reported.
“Spirit Airlines would be on a much firmer financial footing had the Biden administration not recklessly blocked the airline’s merger with JetBlue,” White House spokesman Kush Desai told FOX Business. “The Trump administration continues to monitor the situation and overall health of the U.S. aviation industry that millions of Americans rely on every day for essential travel and their livelihoods.”
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FOX Business reached out to Spirit Airlines for comment.
Reuters contributed to this report.
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