Spirit Airlines, a major US budget carrier, has begun winding down operations and canceling all flights after talks with the Trump administration to secure a $500 million bailout failed. Experts say a spike in aviation fuel prices resulting from the US-Israel war on Iran dealt the final blow to the struggling airline that pioneered the ultra-low-cost carrier model.
The shutdown after 34 years has left approximately 17,000 staff members unemployed, many passengers stranded, and raised doubts about the future of budget air travel. Spirit Aviation Holdings, the parent company, announced on Saturday that it had started an orderly wind-down effective immediately, citing a material increase in oil prices and other business pressures.
Spirit Airlines, which offered lower fares compared to other US carriers, had filed for bankruptcy twice – in November 2024 and August 2025 – due to continued losses, high debt, and intense competition. According to Reuters, the carrier had recently reached a deal with lenders to emerge from its second bankruptcy, but the war on Iran drove aviation turbine fuel prices from $2.24 to $4.51 per gallon, making survival impossible without new financing.
US Transportation Secretary Sean Duffy told Reuters he tried to get many airlines to buy Spirit but found no takers. President Donald Trump said he attempted to provide a $500 million financing package, but only if it was a good deal. A creditor close to the deal noted that the Trump administration made an extraordinary effort, but “you can’t breathe life into a corpse.”
Anita Mendiratta, special adviser to the UN Tourism secretary-general, stated that while war and geopolitical instability may not have caused Spirit’s collapse, they likely delivered the final blow. “Surging fuel costs exposed the vulnerability of airlines operating on thin margins with little room for shock absorption,” she told Al Jazeera.
The war on Iran has disrupted global oil prices, with Brent crude rising above $111 per barrel. Airlines worldwide are raising prices and reducing flights. Lufthansa canceled 20,000 flights, and Air India increased fuel surcharges while cutting 100 daily flights. Mendiratta warned that the aviation industry remains on alert, as carriers with high debt and exposure to fuel cost volatility face sustained pressure, especially low-cost operators.
Source: www.aljazeera.com