A group of US low-cost carriers (LCCs) met with Transportation Secretary Sean Duffy on Tuesday 21 April to petition for tax relief. Members of the Association of Value Airlines – Spirit Airlines, Frontier Airlines, Allegiant Air, Sun Country and Avelo – all argue that a temporary pause on taxation will allow the carriers to manage rising fuel costs more easily.

Federal excise tax on plane tickets currently stands at 7.5%, while domestic segment tax adds a further US$5.30 per flight. Jet fuel costs have now risen above US$4.24 per gallon due to the ongoing conflict between the US and Iran. Damage to oil refineries in the Gulf states as well as the US blockade of the Strait of Hormuz has resulted in spiralling prices and even concerns that certain aviation markets could ‘run out’ of fuel if an agreement isn’t reached soon.

The low-cost model is especially susceptible to these price fluctuations. LCCs in the US were already navigating a difficult market due to wider economic uncertainty and changing customer habits. Allegiant and Sun Country announced they were merging in January this year to better withstand these pressures, which forced rivals Spirit Airlines to file for bankruptcy for a second time in August 2025. Spirit’s recovery projections had anticipated fuel prices of US$2.24 a gallon, around half of existing rates. Some analysts have doubted whether Spirit’s business could survive the year if the jet fuel crisis lasts any longer.

Duffy said Spirit’s struggles were on his agenda and had been noted by President Trump. Trump himself told CNBC:

You know, Spirit’s in trouble … Maybe the federal government should help that one out.

The LCC CEOs who met Duffy argued that a temporary waiver on taxes could offset a third of the additional fuel costs. Congressional approval will be required to pass such a measure, and given these taxes are being used to fund the expensive Federal Aviation Adminstration (FAA) overhaul, alternative finances would need to be soured to plug the revene gap.

Join us at Aviation Festival Americas 2026, where LCC CEOs will discuss the current operating environment in a dedicated panel. 

For more like this, see: