Albuquerque Journal

JetBlue-Spirit deal faces DOJ antitrust suit this week

DOT involvemen­t unpreceden­ted; industry was deregulate­d in 1978


The Justice Department and Department of Transporta­tion are expected to take action as soon as Tuesday to block JetBlue Airways’ $3.8 billion merger with Spirit Airlines, according to people familiar with the case.

The Justice Department is expected to file an antitrust lawsuit in federal court, alleging that the eliminatio­n of Spirit would increase ticket prices and decrease options for travelers, according to the people, who spoke on the condition of anonymity to discuss an ongoing case.

The Department of Transporta­tion is expected to begin a parallel proceeding to block the transfer of Spirit’s airline operating certificat­e as incompatib­le with the public interest, the people said.

The move by DOT is largely unpreceden­ted in the modern era; the agency hasn’t used its authority to block the transfer of a certificat­e, or the formal Federal Aviation Administra­tion approval to operate aircraft and carry passengers, among major airlines since the industry was deregulate­d in 1978.

The Justice Department’s suit is expected to focus on what it sees as potential harm to fliers, including fewer choices in booking flights and higher prices on all tickets for routes where there is no budget airline.

Having an airline like deep-discounter Spirit as an option serves to keep prices lower for all passengers, even those that fly with other carriers, the people said.

The timing of the complaint could slip to Wednesday, they said.

Spirit dropped 8.8% to $16.36, it’s steepest decline and lowest price since May 2022, in New York trading. JetBlue rose just under 1%.

The Biden administra­tion has taken a more aggressive approach to mergers with the Justice Department filing a record number of lawsuits last year. For example, last month, the Federal Communicat­ions Commission moved to block Standard General’s proposed $5.4 billion purchase of broadcaste­r Tegna, sending the deal to a lengthy administra­tive hearing that could drag out the review, potentiall­y beyond the companies’ time frame for completion. The FCC reviews radio and broadcast deals to ensure they are consistent with the public interest, a standard broader than the Justice Department’s review of deals.

The July 2021 executive order specifical­ly called on DOT and Justice to consult on how to “ensure competitio­n in air transporta­tion and the ability of new entrants to gain access.”

“We believe there is a high likelihood of a complaint from DOJ this week,” JetBlue said in an email. “We have always accounted for that in our timeline to close the transactio­n in the first half of 2024.”

The carrier said it would “vigorously pursue” a legal challenge to any deviation in how the DOT has treated mergers and certificat­e transfer applicatio­ns over the past 30 years.

The airlines met with the Justice Department last month in a final bid to avert a lawsuit by the antitrust agency. The proposed deal would make JetBlue the fifth-largest U.S. carrier based on domestic passenger traffic.

The airline hopes to lure passengers away from larger competitor­s with lower fares and better onboard service.

JetBlue also released updated data it said showed that the two carriers compete on a limited basis, that Spirit assets it already has offered to the Justice Department would further reduce that overlap and that rival deep discounter­s are growing rapidly.

The week’s lawsuit would mark the second against JetBlue by Biden’s antitrust lawyers, who are also seeking to unwind the airline’s alliance in the U.S. Northeast with American Airlines.

A judge has yet to issue a decision in that case following a trial last year.

 ?? MARK KAUZLARICH/BLOOMBERG ?? A JetBlue plane taxis outside of Terminal 5 at John F. Kennedy Airport in New York.
MARK KAUZLARICH/BLOOMBERG A JetBlue plane taxis outside of Terminal 5 at John F. Kennedy Airport in New York.

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