With news that the low-cost carrier Spirit Airlines is headed for liquidation this weekend, travel experts say that those who booked flights with the beleaguered airline are unlikely to be reimbursed for their canceled trips.
The Wall Street Journal reported earlier this week that Spirit Airlines was primed to go under on Saturday after a failed bailout effort with the federal government. Spirit had been in ongoing negotiations with the Trump administration and the secretaries of Transportation and Commerce in the weeks leading up to its eventual insolvency.
Negotiations for “hundreds of millions” in emergency rescue funds involved the federal government assuming a significant ownership stake in the company, WSJ reported.
Spirit Airlines has struggled to find any financial footing since its inception and has filed Chapter 11 bankruptcy proceedings on two separate occasions, all happening within 18 months of each other.
The government receiving a large equity stake for a financially insolvent company would be unheard of in the airline industry, although similar instances have become somewhat commonplace during the second Trump administration. Travel experts, including Ben Schlappig of One Mile at a Time, had raised concerns that the federal government’s involvement with Spirit could create unfair conflicts of interest. Those fears ultimately proved to be unnecessary as the bailout failed to materialize.
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A travel expert said Spirit Airlines customers should not expect to receive credits, refunds, or reimbursements for their canceled trips.
“If you have a ticket on Spirit and the airline shuts down, it’s highly unlikely that you’ll get a refund from the airline itself,” said Julian Kheel, travel expert and CEO/Founder of Points Path. “Instead, your best bet is to file a credit card chargeback with your bank. Credit card companies allow consumers to dispute charges when the merchant didn’t provide the service that was promised, and that will obviously be the case with Spirit if it’s no longer in business.”
Spirit, like many low-cost carriers, often deals in nonrefundable fares, which experts say is a contributing factor in the company’s significantly lower prices than other major carriers and many other low-cost carriers.
Kheel said ticket holders left out in the lurch should file their credit disputes sooner rather than later. Any rewards benefits with Spirit are also likely worthless, he said.
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A representative for a travel insurance company said those who booked trips with Spirit Airlines may be covered if their policy includes company collapse.
“You need to check your travel insurance policy to see if financial default is a covered reason for trip cancellation or trip interruption coverage,” said Jeff Rolander, VP of Claims for Faye Travel Insurance. “Important to note that some travel insurance providers exclude things like financial default as a covered reason in their policies, so if that’s the case with your provider, then they will not be on the hook to reimburse you for those flights.”
Spirit, like many low-cost carriers, often deals in nonrefundable fares, which experts say is a contributing factor in the company’s significantly lower prices than other major carriers and many other low-cost carriers. Some airlines might be willing to swoop in and offer “rescue fares” for Spirit’s affected customers, although Kheel notes there are no guarantees, and those fares would likely still be much higher than the original Spirit booking.
Spirit Airlines isn’t the only struggling carrier
Spirit Airlines and the entire travel transportation industry have been ravaged by soaring oil prices brought on by the U.S. war with Iran, as well as shifting consumer spending due to rising inflation and affordability plummeting across the globe. U.S. Transportation Secretary Sean Duffy met with several low-cost carriers in mid-April to discuss their current financial health and challenges as their particular business sector faces its own potential collapse.
Regardless of the health of the low-cost carrier sector, Kheel says Spirit’s departure will have wide-ranging impacts regarding ticket prices on all airlines.
“While Spirit Airlines was never particularly popular with travelers, its disappearance from the landscape will almost certainly mean higher ticket prices in the long run. The carrier’s ultra-low fares forced its competitors to think twice before raising prices. Once it’s gone, there will be less pressure for other airlines to keep airfares down,” Kheel said.
Although often a punching bag for comedy fodder, the company did serve an important purpose for budget-savvy or cash-strapped travelers, and employed several thousand workers who will find themselves out of a job when the sun rises Sunday.
