WASHINGTON (Reuters) – US Transportation Secretary Sean Duffy said Saturday he does not think the government needs to bail out low-cost airlines that have sought $2.5 billion in government relief because of high jet fuel prices.
“I would say that at this point, I don’t think it’s necessary. They do have access to cash. If they want to come to the U.S. government, we would be a lender of last resort. If they can find dollars in the private markets — I think that’s better for them,” Duffy said at a press conference at Newark airport after the collapse of budget carrier Spirit Airlines.
On Monday, a group of U.S. budget airlines, including Frontier (ULCC.O), and Avelo, said it had proposed exchanging warrants that could be converted into equity stakes for $2.5 billion in U.S. government assistance.
The Association of Value Airlines confirmed it asked President Donald Trump’s administration to create a $2.5 billion liquidity pool, 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.”
They have also asked Congress to suspend the 7.5% federal excise tax on airline tickets and $5.30 per segment tax. Waiving the fees would offset about one-third of the incremental cost of higher jet fuel.
