Money explained · Air travel

What Happens to Your Ticket When an Airline Goes Bankrupt

A bankruptcy filing doesn't cancel your flight. A shutdown does, and then how you paid decides what you get back. Here are the federal rules, checked against the documents.

By Line Item · November 15, 2026 · Rules checked November 15, 2026

Rules change, so every rule below links to the document it comes from.

When Spirit Airlines stopped flying on May 2, 2026, it had already been in bankruptcy twice. For most of those 18 months its tickets worked normally. Then, overnight, they didn't. What happened to the money people had paid depended almost entirely on one thing: how they paid for the ticket.

This page explains how that works under federal rules. It is general information, not legal or financial advice.

Bankruptcy is not the same as shutting down

An airline that files for bankruptcy does not necessarily cancel any flights. It may reorganize and keep flying, which is what Chapter 11 is for, or it may stop and sell what it owns, which is liquidation.^A01 Spirit did the first twice, in November 2024 and again in August 2025, and kept flying both times.^A14 It did the second in May 2026.

So there are two different situations, and different rules apply.

If the airline is in bankruptcy but still flying

Your ticket is generally still a ticket. The Department of Transportation's (DOT) advice is to check with the airline before going to the airport, in case your flight or schedule has changed.^A01

If the airline cancels your flight or changes it significantly, DOT's refund rule normally applies. A full refund of the fare, taxes and paid extras is due automatically if the airline cancels and offers no alternative, or if you turn down or don't respond to the alternative it offers.^A07 A "significant change" includes leaving or arriving three or more hours off schedule on a domestic trip (six on an international one), a different airport, or extra connections.^A07 The rule says "prompt" means within 7 business days for credit card purchases and 20 calendar days for cash, debit and other payments.^A07

An airline can offer a voucher or credit instead, but only as an explicit alternative, with a notice that you have the right to a full refund, and only if the voucher stays valid for at least five years.^A08

There is one catch. DOT itself warns that bankruptcy law can override this: a company in bankruptcy "may be temporarily prohibited" from paying refunds or issuing vouchers, for example to conserve its assets.^A02 When that happens, DOT points to the same routes it lists for a shutdown, below.

One recent change: DOT has paused enforcement of the refund rule for flights that are only renumbered, with no significant change, until July 7, 2027, while it writes a new version of the rule. For real cancellations and significant changes, the refund rule is still enforced.^A09

If the airline stops flying

DOT's guidance lists three routes to getting money back once an airline has stopped flying: your card issuer, your travel insurance, or a claim in the bankruptcy case.^A03 Which ones are open to you depends on how you paid.^A10^A17

How you paid	Main route	What federal rules say
Credit card, directly with the airline	Dispute with your card issuer	Covered by the Fair Credit Billing Act. A service you paid for and didn't receive counts as a billing error.
Debit card	Your bank	DOT points to no federal right here. Some issuers protect you voluntarily.
Travel agent or booking site	The agent	Whoever charged your card (the "merchant of record") handles the refund. Spirit told agent customers to go to their agent.
Voucher, credit or airline points	Bankruptcy claim	You are an unsecured creditor, paid after higher-priority debts.
Any of the above, with travel insurance	Your insurer	Only if the policy covers airline insolvency. Check the wording.

Credit cards: the strongest protection

Under federal rules, a charge on your credit card for "services not accepted ... or not delivered ... as agreed" is a billing error, and you have the right to dispute it.^A05 The rules set the timetable:

Deadline: your written notice must reach the card issuer within 60 days after it sent the first statement showing the charge.^A05 DOT notes that issuers sometimes waive this deadline for travel that hasn't happened yet, but they don't have to.^A04
Address: the notice goes to the dispute address on your statement, which may not be where you send payments.^A04
Contents: DOT's guidance lists your account number, a copy of the ticket or receipt, which flights you used and didn't use, and a statement that the airline stopped flying and you're requesting a credit under the Fair Credit Billing Act.^A04
What the issuer must do: acknowledge your dispute within 30 days and resolve it within two billing cycles, and never more than 90 days. While it's open, you don't have to pay the disputed amount.^A05

Your issuer may also let you start a dispute online or by phone. The written notice within 60 days is what the law guarantees.

Why card refunds tend to get paid. When a bankrupt airline looks shaky, the company that processes its card payments wants protection against exactly this wave of disputes. In August 2025, Spirit agreed to move another $50 million into an account pledged to its card processor and to let the processor hold back up to $3 million a day of its card sales. Those holdbacks are there to cover customer refunds if the airline fails to fly.^A15 When Spirit shut down, it said it would automatically refund flights bought directly with a credit or debit card to the original card.^A10

Debit cards

The billing-error rights above apply to credit cards. For debit cards, DOT says only that "some debit card issuers may voluntarily provide protections" for services that weren't provided, and that you should contact your bank.^A06

Vouchers, credits and points

These are the hardest to recover. Spirit said compensation for bookings made with vouchers, credits or Free Spirit points would be "determined at a later date through the bankruptcy process."^A10

That means filing a proof of claim. DOT warns that passengers seeking refunds are general unsecured creditors, paid after banks, suppliers and other priority debts, and "each creditor may only receive a small fraction" of what it is owed.^A03 It also says the process can take time and may only pay part of the refund.^A12

One detail in the Bankruptcy Code can help individuals. It gives a higher priority, the seventh in line, to individuals' claims for money paid in advance for personal or household services that were never provided, up to a cap per person. For cases filed on or after April 1, 2025, the cap is $3,800.^A13 Whether a particular voucher or ticket qualifies is decided by the court in each case.

Travel insurance

DOT's advice is to check whether your policy covers "insolvency" or "service cessation."^A12 Policies, including the cover that comes with some credit cards, differ on whether they pay out when an airline fails, so the policy wording is what counts.

If you're stranded

DOT's advice for travelers caught away from home is to ask other airlines that fly your route whether they will accept your ticket, on a confirmed or standby basis, or offer a discounted new one.^A16

After Spirit stopped flying, several airlines offered deals, each for a short time. United, Delta, JetBlue and Southwest capped fares for Spirit customers who could show a Spirit confirmation number and proof of payment. JetBlue's offer lasted 72 hours. Southwest's lasted 72 hours, at airport counters only. Delta's lasted five days and United's two weeks, online. Frontier offered up to 50 percent off base fares until May 10.^A11 None of these were required by law.

What this page can't tell you

Your card issuer's own rules. Banks and card networks may offer more than the law requires, such as longer windows, but they set those rules themselves and can change them.
What a bankruptcy court will pay. Each case is different, and payouts to unsecured creditors are often small and slow.
Foreign airlines. Other countries' bankruptcy laws may apply to foreign carriers and ticket agents.

Film: What Really Killed Spirit Airlines (In Its Own Words), the sworn filings behind the shutdown and who paid when it was gone.

This is general information, not financial or legal advice. Every rule on this page links to the document it comes from in the evidence locker below. Found an error? Tell us and we will correct it on this page.

Evidence locker

Every rule and number on this page, the document it comes from, and how far we could check it.

A01An airline bankruptcy does not necessarily mean a flight is cancelled: the airline may reorganize and keep operating, or stop and liquidateVerifiedfinding
DOT Office of Aviation Consumer Protection, 'Aviation Industry Bankruptcy and Service Cessations' (last updated Apr 16, 2026; read Nov 15, 2026), 'My airline or ticket agent declared bankruptcy' · Open source
A02If an airline or ticket agent has filed for bankruptcy, it may be temporarily prohibited from providing refunds and/or vouchersVerifiedfinding
DOT Office of Aviation Consumer Protection, 'Aviation Industry Bankruptcy and Service Cessations' (last updated Apr 16, 2026; read Nov 15, 2026), 'What if the airline cancelled my flight?' · Open source
A03Even if the airline has ceased flying, a refund may be obtainable through the credit card company or travel insurance; a proof of claim in the bankruptcy is another option, where passengers are general unsecured creditors paid after priority debts and may receive a small fractionVerifiedfinding
DOT Office of Aviation Consumer Protection, 'Aviation Industry Bankruptcy and Service Cessations' (last updated Apr 16, 2026; read Nov 15, 2026), 'What if my airline ... has stopped flying?' · Open source
A04DOT's guidance for a credit card claim: write to the issuer's dispute address (may differ from payment address) with account number, copy of ticket/itinerary/receipt, used and unused segments, and a statement that the airline ceased operations and a credit is requested under the Fair Credit Billing Act; generally due within 60 days of the first statement showing the charge, though issuers sometimes waive the deadline for future transportationVerifiedfinding
DOT Office of Aviation Consumer Protection, 'Aviation Industry Bankruptcy and Service Cessations' (last updated Apr 16, 2026; read Nov 15, 2026), 'I used a credit card...' · Open source
A05Regulation Z: a billing error includes credit 'for property or services not accepted ... or not delivered ... as agreed'; notice must be written and received within 60 days after the first statement showing it; issuer must acknowledge within 30 days and resolve within 2 billing cycles (max 90 days); the consumer need not pay the disputed amount while it is resolvedVerifiedfinding
12 CFR 1026.13 (Regulation Z, billing error resolution), eCFR current as of Nov 12, 2026; evidence/sources/ecfr_12_1026_13.xml, 1026.13(a)(3), (b)(1), (c), (d)(1) · Open source
A06Debit cards: some issuers may voluntarily provide protections for services not provided; DOT says to contact the issuerVerifiedfinding
DOT Office of Aviation Consumer Protection, 'Aviation Industry Bankruptcy and Service Cessations' (last updated Apr 16, 2026; read Nov 15, 2026), 'I used a debit card...' · Open source
A07DOT refund rule: a full refund of fare, taxes and ancillary fees is due automatically when a flight is cancelled and no alternative is offered, or the consumer rejects or does not respond to the alternative; 'prompt' means 7 business days for credit card purchases and 20 calendar days for cash, check, debit and others; a significant change includes departing or arriving 3+ hours off schedule (6+ international), a different airport, or more connectionsVerifiedfinding
14 CFR 260.2 and 260.6, eCFR current as of Nov 12, 2026; evidence/sources/ecfr_14_260_*.xml, 260.6(a)(2); 260.2 definitions · Open source
A08A voucher or credit can replace a required refund only if offered explicitly as an alternative, with notice of the right to a full refund, and valid for at least five yearsVerifiedfinding
14 CFR 260.2 and 260.6, eCFR current as of Nov 12, 2026; evidence/sources/ecfr_14_260_*.xml, 260.6(c) · Open source
A09DOT has paused enforcement of the refund requirements only for flights that are renumbered without a significant change, until July 7, 2027, while its 'Refund III' rulemaking is pending; standard refund mandates remain enforceable otherwiseVerifiedfinding
Federal Register, 91 FR 41556 (Jul 7, 2026), DOT enforcement discretion notice; evidence/sources/fr_2026-13675.htm, Summary · Open source
A10Spirit said (May 2, 2026) it would automatically refund flights bought through Spirit with a credit or debit card to the original form of payment; travel-agent bookings go to the agent; compensation for bookings made with vouchers, credits or Free Spirit points would be determined later through the bankruptcy processVerifiedself-reported
Spirit Airlines press release 'Spirit Airlines Begins Orderly Wind-Down of Operations', May 2, 2026, as republished in full by Breaking Travel News (spiritrestructuring.com returned an error on Nov 15, 2026), final paragraph · Open source
A11After Spirit stopped flying, United, Delta, JetBlue and Southwest capped fares for Spirit customers rebooking (proof needed: Spirit confirmation number and payment); windows: JetBlue 72 hours, Southwest 72 hours at airport counters only, Delta 5 days, United two weeks online; Frontier offered up to 50% off base fares until May 10Verifiedself-reported
DOT press release, 'Secretary Sean P. Duffy Secures Relief for Spirit Airlines' Flyers and Employees', May 2, 2026, 'Actions for Flyers' · Open source
A12DOT's May 2, 2026 refund guidance for Spirit ticketholders: card chargeback under the Fair Credit Billing Act; check travel insurance for 'insolvency' or 'service cessation' cover; a bankruptcy proof of claim can take time and may only result in a partial refundVerifiedfinding
DOT press release, 'Secretary Sean P. Duffy Secures Relief for Spirit Airlines' Flyers and Employees', May 2, 2026, 'Refresher on Compensation Rules' · Open source
A13Bankruptcy Code seventh priority: unsecured claims of individuals from money deposited for property or services for personal, family or household use that were not delivered or provided, up to a dollar cap per person; the cap is $3,800 for cases filed on or after April 1, 2025Verifiedfinding
11 U.S.C. 507(a)(7) (govinfo, USCODE-2023); Federal Register 90 FR 8941 (Feb 4, 2025), adjustment of dollar amounts; evidence/sources/usc_11_507.htm, fr_2025-02207.htm, 507(a)(7); table · Open source
A14Spirit filed Chapter 11 on Nov 18, 2024, left bankruptcy on Mar 12, 2025, and filed again on Aug 29, 2025, operating flights through both cases until it stopped flying on May 2, 2026Verifiedself-reported
Line Item film 001, claims C09, C12, C16, C01 (Spirit filings: Doc 19, 8-K Aug 29, 2025; Doc 1011) · Open source
A15In August 2025 Spirit agreed to move another $50M into an account pledged to its card processor and let it hold back up to $3M a day of card sales; holdbacks cover customer refunds if Spirit fails to flyVerifiedself-reported
Line Item film 001 claim C15; Cromer First Day Declaration, In re Spirit Aviation Holdings, No. 25-11897, Doc 19, pp. 20-21, Doc 19 paras 48-49 · Open source
A16DOT's advice if stranded: check whether other airlines will accept the ticket (confirmed or standby) or offer a discounted new ticketVerifiedfinding
DOT Office of Aviation Consumer Protection, 'Aviation Industry Bankruptcy and Service Cessations' (last updated Apr 16, 2026; read Nov 15, 2026), 'What if I am stranded...' · Open source
A17DOT's refund rule defines the merchant of record as the entity (carrier or ticket agent) that processed the consumer's payment, as shown on card statements; the rule's refund duty falls on the carrier that is the merchant of recordVerifiedfinding
14 CFR 260.2 and 260.6(a)(1), eCFR current as of Nov 12, 2026, 260.2 definitions; 260.6(a)(1) · Open source

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