The DOJ filed a lawsuit Tuesday to block the merger of JetBlue Airways and Spirit Airlines with the statement that the $3.8 billion deal would reduce competition in the aviation industry.
The department’s Antitrust Division argued that JetBlue would eliminate the competitive market by purchasing Spirit Airline , that has kept low airfares . The merger would give JetBlue the strength to fly dozens of routes, which would drive up fares and reduce the choice for travelers, it will make air travel more expensive, especially for middle-class families.
“This merger will limit options and raise ticket prices for travelers across the country,” Attorney General Merrick Garland said at a news conference. The lawsuit was filed in US District Court in Massachusetts. The Justice Department brought the matter up with Massachusetts, New York, and the District of Columbia.
If the companies hold strongly, the deal would be the first major US airline merger since Alaska Airlines acquired Virgin America in 2016. The deal helped JetBlue to achieve rapid expansion, as well as Alaska Airlines to become the nation’s fifth-largest carrier. JetBlue said that buying Spirit would also help it better compete with the nation’s largest airlines.
A series of massive deals that ended a decade ago greatly increased the power of the big four airlines. Even if JetBlue acquires Spirit, the new company will still only have about 10 percent of the US air travel market. United Airlines, the fourth largest carrier, has a 15 percent market share. American Airlines, Delta Air Lines and Southwest Airlines each held more than 17 percent of the business.
“They’re losing perspective here as to overall profit,” Robin Hayes, JetBlue’s CEO, said in an interview. “We’re as committed to low rents as anyone else.”
But the DOJ disagreed, saying in its lawsuit that JetBlue has evolved from a disruptive force to an “associate of the big four airlines.” For example, the department pointed to partnerships between JetBlue and American in New York and Boston that allow them to sell seats on each other’s flights more seamlessly. The Justice Department filed a lawsuit to block that partnership, known as the Northeast Alliance, and a decision on that matter is expected soon.
“While JetBlue offers the cheapest travel tickets, Spirit also offers cheaper fares, making it a significant threat to the major airlines at airports,” the department argued. Spirit is considered an “Ultra Low Cost Carrier”, a type of airline that works hard to keep costs and fares lower than most airlines. Among those carriers, Spirit stands out because it frequently challenges the largest airlines at its hub airports, according to the suit.
The DOJ argued that Spirit forced JetBlue to lower fares in 2020. After Spirit discontinued its flights between Boston and Fort Myers, Fla., JetBlue increased these same fares.
To address some antitrust concerns, JetBlue promised to divest Spirit’s holdings in New York, Boston and Fort Lauderdale, Fla. But the Justice Department said the only remedy was for JetBlue and Spirit to remain independent airlines.