Spirit Airlines Ceases Operations, Cites 56% Surge in Fuel Costs

Spirit Airlines shut down operations with all flights canceled, citing the increase in aviation fuel costs as the main cause for its closure. The Department of Transportation revealed that aviation fuel prices increased by 56% over the war in Iran. The department posted the update as required periodically by the Office of Management and Budget.

23 billion for fuel. 06 billion, a 56% increase that matched the reported rise in prices. 39 in February.

13 per gallon in March. "Airline fuel costs may be affected by hedging, contracts that allow airlines to limit exposure to future price changes," the Department of Transportation said. The sharp rise in aviation fuel costs dealt the final death blow to Spirit Airlines.

The budget carrier had thinner profit margins than larger competitors, giving it less flexibility to absorb the surge. Other budget airlines could face similar pressure in coming weeks. Prices only seem set to rise further as vessels continue to be stranded in the Persian Gulf due to Iran’s closure of the Strait of Hormuz.

The Department of Transportation issued its data months after the closure began disrupting tanker traffic and pushing up global oil costs. Washington Examiner reported that the impact is likely to be felt soon by passengers who could see higher plane ticket prices. 23 billion.

That month-to-month swing occurred even though some carriers use hedging and long-term contracts to blunt immediate price shocks. The Department of Transportation noted these financial tools in its periodic update but did not provide carrier-by-carrier breakdowns. Spirit Airlines’ decision to cease all operations marks one of the most immediate corporate casualties tied to the fuel spike.