Discount airlines not giving up on bid to secure government aid: Avelo CEO

Avelo’s chief thinks the Trump administration will be sympathetic to helping discount airlines overcome a competitive quagmire created by government policy.

US discount airlines will continue pressing the Trump administration for financial aid despite the US government failing to offer Spirit Airlines a suitable bailout prior to that airline’s 2 May shutdown.

That is according to Avelo Airlines chief executive Andrew Levy, who says elevated fuel prices have laid bare competitive troubles created in part by US government decisions, including Covid-era bailouts and mega-merger approvals.

Levy warns that without support, more discount airlines could fail, to the detriment to consumers — a point he suspects still interests the Trump administration.

“We certainly are going to seek the administration’s support, if not for the exact proposal we put in front of them, then some variation of it,” Levy told FlightGlobal on 2 May.

“If they want to have a sustainable low-fare segment of the marketplace, then it’s very possible they may need to consider doing some things they might not naturally want to consider,” he adds.

Several weeks ago, the Association of Value Airlines, of which Avelo belongs, submitted to the administration a proposal seeking $2.5 billion in financial aid. They did so in response to a request to meet with US transportation secretary Sean Duffy, Levy says.

“They were concerned about maintaining a healthy, competitive industry,” Levy says. “We made a request that included funding that would help during this period of an incredibly high increase in fuel.”

The government did not bite.

Spirit separately sought $500 million in an attempt to keep solvent. And while the government did make Spirit an offer, the airline’s creditors rejected the deal, which would have granted the USA ownership rights.

Airlines for America (A4A), the trade group representing the USA’s largest carriers and some midsize players, opposes the aid requests.

“Government intervention on behalf of those airlines would punish other airlines that have engaged in self-help in order to deal with increased costs, and reward airlines who haven’t made those tough decisions. That’s not a level playing field,” A4A says.

Speaking at Newark Liberty International airport on 2 May, transportation secretary Duffy expressed doubt that the government might help other carriers.

“At this point, I don’t think it’s necessary. They do have access to cash. If they want to come to the US government, we would be a lender of last resort,” Duffy says.

Spirit ceased operating early on 2 May due to a cash shortfall months in the making but exacerbated by elevated fuel prices, a consequence of the US war against Iran.

“Spirit was in dire straits long before the war with Iran. Their model wasn’t working,” Duffy says.

The airline was operating under bankruptcy court supervision after having filed in 2025, for the second time in one year.

The carrier’s chief executive Dave Davis said on 2 May that Spirit had a promising reorganisation plan but that fuel prices forced its demise.

Duffy says Trump “was like a dog on a bone trying to figure out a way to keep Spirit afloat. In the end, this was a creditor issue. They have the final say”.

GOVERNMENT INTERVENTION

Levy calls himself a free-market capitalist but says the airline industry is anything but a free market due to government intervention.

He cites merger approvals that created today’s Big Four airlines — American Airlines, Delta Air Lines, Southwest Airlines and United Airlines, which collectively control about three-quarters of the market. He also points to the Biden administration’s decision to torpedo JetBlue Airways’ proposed acquisition of Spirit in 2024, due to anti-competitive concerns.

But, Levy says, “The most consequential, by far, intervention into the free market was” the US government’s $50-billion-plus airline bailout during the Covid-19 pandemic.

That money is widely credited with saving jobs.

But Levy says it distorted the market by preventing airlines with weaker finances — like American, JetBlue and United — from being forced into bankruptcy, which would likely have led them to shrink.

“Those companies… instead came out with more money than they’d ever had, and a stronger balance sheet than they’d ever had,” Levy says. “The effects of what the US government did during Covid are continuing and will continue to drive this industry for years, if not decades.”

It’s a message Levy still thinks will interest Trump.

“If the US government wants to have a competitive industry where people have choice, and therefore prices are more affordable, [than] it’s about time that they do some things to try to tip the scales in the favour of” smaller airlines.