U.S. Moves To Block Airline Merger


Tailfin of a JetBlue airplane | Image by NBC 5 DFW

Federal regulators have moved to block JetBlue Airways’ $3.8 billion purchase of Spirit Airlines.

Attorney General Merrick B. Garland announced that the Justice Department had filed a complaint against the acquisition on March 7 on the grounds that it violates Section 7 of the Clayton Act — a federal antitrust law.

This merger between JetBlue and Spirit, which currently “compete on hundreds of routes that serve tens of millions of air travelers every year,” would “limit choices and drive up ticket prices for passengers across the country,” Garland suggested.

Those who typically rely on ultra-low-cost carriers like Spirit — the nation’s largest — to travel for leisure would be particularly affected.

On this point, Garland referred to comments made by Spirit’s own executives, who told its shareholders that the merger would “significantly diminish capacity” and “result in higher prices for consumers,” according to internal documents acquired by the Justice Department.

As The Dallas Express previously reported, some experts have voiced similar concerns about the proposed JetBlue and Spirit merger.

William McGee, a senior fellow for aviation and travel at the American Economic Liberties Project, claimed the deal would harm competitiveness and raise the cost of airline travel instead.

“Spirit is going to disappear, and with it, its low-cost structure,” McGee said, per NBC 5. “Once Spirit is absorbed, there is no question that fares are going to go up.”

For its part, the U.S. Department of Transportation released a statement supporting the Justice Department’s complaint. USDOT also has the authority to block the planned merger.

Both airlines had expected the lawsuit after negotiations over a possible settlement with federal regulators failed.

“My sense is they came to the table with their minds made up,” Robin Hayes, CEO of JetBlue, told The Wall Street Journal the day before the lawsuit was filed. He added that while both airlines were prepared to fight it out in court, it would delay some of what they were trying to achieve through the merger.

These objectives include resuming service to smaller cities, improving the response to severe weather and other disturbances, and rivaling the top four airlines in the country — American Airlines, United Airlines, Delta Air Lines, and Southwest Airlines — with a 9% market share.

On this last point, as WFAA reported, JetBlue’s executives have consistently maintained that their proposed merger would offer consumers more options. Currently, the top four carriers collectively control about 80% of the domestic air-travel market.

Moreover, these industry giants were able to grow through mergers and acquisitions between 2008 and 2013 facilitated by the Justice Department.

Under the Biden administration, per the WSJ, the policies of the Justice Department have shifted towards a much more aggressive stance on corporate mergers and antitrust enforcement.

Neither JetBlue nor Spirit has provided comment since the lawsuit was filed.

The Justice Department’s complaint will be reviewed by a federal judge in Boston and a ruling is expected soon, per WFAA.

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