Why Discount Carriers Like Spirit and Frontier May Come Up Short in the U.S. Airline Bailout
Skift Take
Ultra-low-cost carriers have gotten a raw deal from the U.S. governments bailout. There's no good reason these airlines should be forced to fly so many flights when demand is near zero.
U.S. travelers spent much of the last decade complaining about discount airlines that charged low fares but bombarded consumers with fees. Now the U.S. government may be pushing at least two prominent ultra-low-cost-carriers — Frontier Airlines and Spirit Airlines — into financial purgatory, though perhaps not on purpose.
The CARES Act signed last month by President Trump includes up to $50 billion in grants and loans for U.S. passenger airlines, a group that includes not only full-service carriers, but also discount ones. But the legislation overwhelmingly favors larger airlines, and while the U.S. Department of Transportation had a chance to tweak requirements on grant money to help smaller carriers, it has not done so.
The biggest impediment is a requirement that airlines fly to most domestic markets they served before the Covid-19 pandemic suppressed travel demand. Congress did not want airlines to take billions in government subsidies and then quit providing air service for people who needed it.
Airlines understood the concerns, but expected the Department of Transportation would show leniency, allowing them temporarily to drop markets that don't make sense in a climate where demand is down 90 percent or more.
This week, though, the Department of Transportation signaled it'll be stingy with exceptions. On Thursday, in one of its first rulings,
