Spirit Airlines Could Close: What Travelers Need to Know

Spirit Airlines is getting ready to close, according to various reports. This could spell the end for the ultra-low-cost airline.

According to the Wall Street Journal and Bloomberg, negotiations with the US government over a $500 million bailout have stalled. As a result, the airline cannot continue operating at a loss, as jet fuel prices remain more than 80% higher than in February, before the start of the US war in Iran.

Spirit has struggled to turn a profit since the start of the COVID-19 pandemic in 2020 and has filed for bankruptcy twice since late 2024. most recently in August.

Spirit continued to operate flights and sell tickets on Friday. However, concerns across the airline industry were growing.

The Florida-based airline had hoped to emerge from its second bankruptcy this summer. after reaching an agreement with creditors at the end of February; was in the process of reducing its fleet and reconfiguring its network to find a more viable business model.

The recent rise in jet fuel prices following the start of the US-Israel war in Iran has significantly increased costs for all airlines. Fuel is typically the second largest expense for airlines, after labor. And for Spirit, it appears this cost increase is reaching a level the airline can’t reach.

If you’re scheduled to fly with Spirit in the near or distant future, or if you’re now stranded somewhere far from home, here’s what you need to know.

You may be able to get your airfare back.

Typically, during a bankruptcy and liquidation scenario, consumers are among the last to get their money back. The remaining funds and assets typically go first to creditors, then to other parties, and finally to customers and employees, near the bottom of the list.

Fortunately, passengers with future tickets should be able to get some form of refund, as long as they have paid by credit card.

Most major credit cards offer a variety of consumer protections and allow cardholders to dispute charges for goods and services not delivered by the provider.

This would include airfare if the airline can no longer provide the transportation you paid for.

Call the number on the back of your credit card, tell the representative you want to dispute a charge, and then follow the instructions to file a claim.

“However, there is no guarantee that a refund will be made,” Henry Harteveldt, president and travel industry analyst at Atmosphere Research Group, warned in a previous interview.

If you used a debit card to purchase the ticket, it is possible, but less likely, that you will be able to file a dispute for undelivered services, depending on the US Department of Transportation. You should still call the number on the back of your card to find out your options.

Please note that these claims for undelivered services apply only when the provider is at fault. If you choose to cancel a non-refundable trip, you will not be able to initiate a chargeback.

Travel insurance can help, but it may not

Travel insurance, either a stand-alone policy or trip interruption/cancellation coverage included with some credit cards – can save the day when the unexpected happens. It can cover expenses like alternative travel arrangements, hotels, and even things like new clothes, phone chargers, meals, and luggage.

However, whether or not it could help you if Spirit stopped flying would depend on your specific insurance policy.

Credit cards with travel insurance protections

Unfortunately, the travel insurance policies included with many major credit cards don’t seem to apply if the airline you’re booking with goes out of business.

In it benefits guide for him Chase Sapphire Reserve® (see rates and fees) for example, a list titled “What’s not covered?” includes “Default of the Common Carrier resulting from Financial Insolvency or Financial Insolvency of a Travel Agency, Tour Operator or Travel Supplier.” The term “common carrier” refers to a company (such as an airline, train service, or ferry operator) that transports people.

Similarly, in the benefits guide that comes with it American Express Platinum® CardYou will find that “Financial insolvency of a travel agency, tour operator or Travel Provider” appears under the heading “What is not covered” for your trip cancellation and interruption insurance*.

*The maximum benefit amount for trip cancellation and interruption insurance is $10,000 per covered trip and $20,000 per eligible card per consecutive 12-month period. The level of eligibility and benefit varies by Card. Terms, conditions and limitations apply. Visit americanexpress.com/benefitsguide for more details. Underwritten by New Hampshire Insurance Company, an AIG company.

What about independent travel insurance?

If you have a stand-alone insurance policy that you purchased separately, this situation may be covered. Check your policy documents and call the reporting line to start a claim if you are unsure.

However, there is a possible drawback. Spirit filed for bankruptcy in August, just months after emerging from a previous bankruptcy. As Chrissy Valdez, senior director of operations at insurance marketplace Squaremouth, previously told TPGThere is a possibility that tickets purchased after filing for bankruptcy may not be eligible for coverage; This is because bankruptcy counts as a “known event,” which is like a pre-existing condition.

Book new flights

Unfortunately, if your flight has been canceled, you will have to pay out of pocket for a new flight. Prices are high as summer approaches, so you may need to be more flexible when making new arrangements.

Try using Google Flights and search all airlines. Be open to taking a connecting flight even if you prefer a non-stop one. Check different dates and airports if you can.

You’re not likely to find good deals with miles, as airlines value awards dynamically. Still, it’s worth checking prize prices if you have a large number of points.

Could other airlines offer ‘rescue fares’?

Those with an impending trip or who are in the middle of a trip and find themselves stuck should keep an eye out for “rescue fees.” In previous airline shutdowns, some airlines serving the same markets offered discounted fares to help stranded passengers return home.

American Airlines, for example, has said it will consider helping stranded passengers, according to View from the Wing. US CEO Robert Isom said: “I also let management know that if any passengers were stranded and needed help, we would be willing to help.”

TPG will update this section with possible rates or bailout plans offered by other airlines, although there is no guarantee that will happen, especially as other airlines face high fuel costs.

In a nutshell

A Spirit liquidation would mark a sad and unfortunate end for the historic ultra-low-cost airline. While many people loved to hate Spirit, the airline opened up travel opportunities to a wide range of people and forced traditional airlines to lower their prices to compete.

If a potential Spirit insolvency leaves you in the lurch, you may have some options to recover your airfare and possibly even your expenses.

But still, with summer travel approaching and spring break underway, this is a difficult time of year to book last-minute flights. If your travel plans have been affected, you may need some creativity and flexibility to save your trip without paying an arm and a leg.