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On Tuesday, the Justice Department sued to block JetBlue Airway’s acquisition of Spirit Airlines. The Biden administration blocked the $3.8 billion takeover in their latest attempt to prevent industry consolidation.
Although Spirit agreed to the acquisition last summer, there are many challenges for JetBlue from regulators and now the DOJ.
If JetBlue moves forward with the acquisition, it will become the fifth-largest airline in the country and dissolve Spirit, a Florida-based airline.
“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,” the Justice Department said in its complaint, filed in a Massachusetts court on Tuesday. “Spirit itself put it simply: ‘A JetBlue acquisition of Spirit will have lasting negative impacts on consumers.’”
At a Tuesday press conference, Attorney General Merrick Garland spoke about the harm the merger would cause for “working and middle-class Americans who travel for personal rather than business reasons and must pay their own way.”
The DOJ noted Spirit’s internal documents that show when the airline offers a new flying route, average fares fall by 17%, CNBC News reported.
However, JetBlue’s stance is that the takeover would allow it to better compete with large airlines that currently dominate the U.S. market and enable the company to access more Airbus jetliners and pilots–which are both scarce.
JetBlue introduced plans to remodel Spirit’s infamous yellow planes with seats that include seatback screens and more legroom.
“JetBlue competes hard against Spirit and views it as a serious competitive threat. But instead of continuing that competition, JetBlue now proposes an acquisition that Spirit describes as a high-cost, high-fare airline buying a low-cost, low-fare airline,” the DOJ said.
JetBlue and Spirit said in a joint statement Tuesday that they will “continue to advance our plan to create a compelling national challenger to the Big Four airlines.”
“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 a statement.
