Will the Iran war claim another victim because of fuel costs? During the last few weeks, as fuel prices have surged, Italian low-fare carrier GoTo Fly and Royal Air Philippines have folded. Before that, it was Air Albania and Slovenian low-cost airline AlpAvia. Spirit Airlines, which filed for its second bankruptcy in less than a year, is teetering on the brink. Even established names like Qatar Airways, Gulf Air, flydubai, and Air Arabia are reportedly cutting back flights.
Maybe the real question is, will the war claim your airline?
The shrinking skies and the merger mandate
The reality is that the little guys — the startups and regional carriers — are the ones most likely to vanish suddenly. Even Washington is reading the tea leaves. Transportation Secretary Sean Duffy last week hinted that the government was open to approving more airline mergers.
We’re likely to see more marriages of convenience as airlines realize they can’t survive the turbulence of an uncertain operating environment. Some airlines are reportedly paying between $70,000 and $150,000 per flight for war-risk insurance when operating in the Gulf region, which is practically unsustainable for some smaller airlines.
Could the government bail out a troubled carrier? Probably not in the United States. Unlike the pandemic era, governments have mostly closed the checkbook. In other words, if you’re flying a small airline to save 50 bucks, you’re taking a gamble on its balance sheet and a volatile geopolitical situation.
What are your rights if your airline goes belly-up?
If your airline pulls a disappearing act, don’t look to the federal government to fly you home.
- No federal rescue laws. There are no U.S. laws that compel a healthy airline to honor the ticket of a bankrupt competitor.
- Courtesy is a “maybe.” Some carriers might offer distress fares or fly you home at a discount, but only if they have an empty seat.
- Refunds, yes. If an airline cancels your flight — bankruptcy or not — you are legally entitled to a full refund to your original form of payment.
My prediction: There will probably be at least one, and maybe two, big mergers before the end of this year. JetBlue is already reportedly in play. Redeem those miles soon, people!
PRO TIP: Pay with a credit card. The Fair Credit Billing Act lets you dispute the charge if the service isn’t provided. And bookmark our consumer advocacy site. We’re always here to help you.
The takeaway: Stop booking the absolute cheapest startup airline for your summer vacation. If the airline doesn’t have a massive fleet and a deep war chest, your deal might turn into an expensive lesson in bankruptcy law.
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Christopher Elliott is the founder of Elliott Advocacy, a 501(c)(3) nonprofit organization that empowers consumers to solve their problems and helps those who can’t. He’s the author of numerous books on consumer advocacy and writes three nationally syndicated columns. He also publishes the Elliott Report, a news site for consumers, and Elliott Confidential, a critically acclaimed newsletter about customer service. If you have a consumer problem you can’t solve, contact him directly through his advocacy website. You can also follow him on X, Facebook, and LinkedIn, or sign up for his daily newsletter.
