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On Tuesday, the Justice Department sued to block JetBlue Airways from taking over Spirit Airlines in a $3.8 billion deal.
The complaint, filed in Massachusetts in conjunction with New York and the District of Columbia, claims the consolidation would violate antitrust laws and make travel less affordable for price-sensitive consumers.
It alleges that the consolidation would “make it easier for the remaining airlines to coordinate to charge higher fares or limit capacity,” which would mean higher prices or fewer seats.
The complaint also asserts that Spirit’s existence as a budget airline benefits travelers because other airlines are forced to lower fares to compete.
JetBlue and Spirit responded in a news release that they will continue plans to become the fifth-largest airline in the country. JetBlue plans to retrofit Spirit planes by creating more legroom and adding free amenities, according to the release. The airline also argues the consolidation would force competitors to lower prices, which it calls the “JetBlue effect.”
“We believe the DOJ has got it wrong on the law here and misses the point that this merger will create a national low-fare, high-quality competitor to the Big Four carriers which — thanks to their own DOJ-approved mergers — control about 80% of the U.S. market,” JetBlue CEO Robin Hayes said in the release. The “Big Four” carriers are American Airlines, Delta Air Lines, United Airlines and Southwest Airlines.
The suit is the latest effort by the Biden administration to combat consolidation and increase competition. In a 2021 executive order, President Joe Biden singled out multiple industries, including agriculture, information technology, health care services and prescription drugs, shipping, telecommunications and transportation.
“Companies in every industry should understand by now that this Justice Department will not hesitate to enforce our antitrust laws and protect American consumers,” U.S. Attorney General Merrick Garland said in the suit.
The case could take months before it heads to trial.
on Capitalize's website
