The Justice Department sued Tuesday to block JetBlue Airways’ $3.8 billion purchase of Spirit Airlines.
The department said, in a 43-page document, that the merger would reduce competition and drive up fares for consumers. But looking at the document in greater detail it becomes apparent that the purpose of the objection is to save Spirit Airlines from being eliminated, thereby protecting the consumer who is looking for the no-frills, less costly alternative that Spirit offers.
Specifically, the department asserted that the deal would hurt cost-conscious travelers who depend on Spirit to find cheaper fares.
“If the acquisition is approved, JetBlue plans to abandon Spirit’s business model, remove seats from Spirit’s planes, and charge Spirit’s customers higher prices,” the department lawyers wrote. “JetBlue’s plan would eliminate the unique competition that Spirit provides — and about half of all ultra-low-cost airline seats in the industry — and leave tens of millions of travelers to face higher fares and fewer options.”
JetBlue and Spirit have expected the challenge for weeks and negotiations over a possible settlement failed.
JetBlue CEO Robin Hayes told “CBS Mornings” on Tuesday that he was disappointed but not surprised by the lawsuit.
“We said when we got the offer approved by the Spirit shareholders last year that we didn’t think we would close until the first half of 2024, expecting a trial,” he said.
JetBlue and Spirit executives argued that the merger would help consumers by creating a stronger competitor to the four carriers that control about 80% of the domestic air-travel market.
Attorney General Merrick Garland said that the department’s complaint alleges that the proposed merger violates Section 7 of the Clayton Act.
“By acquiring Spirit, JetBlue will eliminate the largest ultra low coast carrier in the United States,” he told reporters in a news briefing, adding that both airlines have large combined market shares and highlighting that JetBlue planned to remove seats from Spirit’s planes and charge customers higher prices.
“We allege that JetBlue’s proposed takeover of Spirit will only exacerbate concentration and further stifle completion in the airline industry,” Garland stated, saying that approval would increase the risk that remaining airlines could coordinate to raise prices or reduce capacity. “The Justice Department is suing to prevent that from happening.”
