By David Shepardson<\/p>\n
WASHINGTON, May 2 (Reuters) – U.S. 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 \u200cgovernment relief because of high jet fuel prices.<\/p>\n
“I would say that at this point, I \u200cdon’t think it’s necessary. They do have access to cash. If they want to come to the U.S. government, we would \u200bbe 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.<\/p>\n
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He said the prospect of a Spirit bailout was seen as an opportunity by some other airlines to \u200cget money “not necessarily based on need, \u2060but based on opportunity.”<\/p>\n
On Monday, a group of U.S. budget airlines, including Frontier and Avelo, said it had proposed exchanging warrants that could be converted into equity \u2060stakes for $2.5 billion in U.S. government assistance.<\/p>\n
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 \u200boperations and \u200bkeep airfares affordable during this period of volatility.”<\/p>\n
They have \u200balso asked Congress to suspend the 7.5% \u200cfederal 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.<\/p>\n
The pitch highlights one of the unintended consequences of the U.S.-Israeli war on Iran: a surge in jet fuel prices that has roughly doubled costs, squeezing margins and pushing weaker airlines closer to the brink.<\/p>\n
The chief executives of several low-cost carriers met with Duffy and Federal \u200cAviation Administration chief Bryan Bedford in Washington last week to \u200bdiscuss the proposal.<\/p>\n
The group arrived at the $2.5 billion figure by estimating \u200bhow much more it expects to spend \u200bon jet fuel this year compared with earlier forecasts.<\/p>\n
Airlines for America, which represents \u200cmajor U.S. passenger airlines, opposed a bailout for \u200bbudget carriers, saying “government intervention on \u200bbehalf 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\u2019t made those tough decisions. That\u2019s not a \u200blevel playing field.”<\/p>\n
The group added that \u200cin the long-term, sustaining businesses unable to earn their cost of capital harmed competition and \u200bconsumers by making it more difficult for other airlines to compete and attract private \u200bsector capital.<\/p>\n
(Reporting by David Shepardson, Editing by William Maclean)<\/p>\n","protected":false},"excerpt":{"rendered":"By David Shepardson WASHINGTON, May 2 (Reuters) – U.S. Transportation Secretary Sean Duffy said Saturday he does not…\n","protected":false},"author":2,"featured_media":644470,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46,240050,240051,32359,239968],"class_list":["post-644469","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-economy","tag-government-assistance","tag-incremental-cost","tag-sean-duffy","tag-spirit-airlines"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/644469","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=644469"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/644469\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/644470"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=644469"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=644469"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=644469"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}