The Department of Transportation has been contacted by an industry group that represents low-cost airlines about establishing a $2.5 billion fund to support their operations given the continued high cost of jet fuel.
According to The Wall Street Journal and The New York Times, the Association of Value Airlines, which represents Allegiant Air, Avelo Air, Frontier Airlines, Spirit Airlines, and Sun Country, stated on Monday that it has contacted the Trump administration regarding the pool because an 88% increase in jet fuel prices is jeopardising their capacity to conduct business.
In addition to the AVA request, Spirit Airlines has been discussing a potential $500 million bailout from the federal government after warning that it is running low on funds.
Following the United States and Israel’s initiation of the war in Iran, which prompted the country to blockade the Strait of Hormuz in retaliation and resulted in a sharp spike in the price of petrol and oil, airlines throughout the world began boosting fares in March.
About 30% of airline operational expenses are related to fuel, and even a consistent $1 increase in oil prices per barrel can result in millions of dollars more in costs.
