Dampening Spirit

DOJ moves to block merger with JetBlue

The Justice Department sued Tuesday to block JetBlue’s pending $3.8 billion acquisition of Spirit Airlines, arguing the deal would rob millions of American travelers of lowcost flying options.

The DOJ’s complaint argues that competition between JetBlue and Spirit has benefited cost-conscious consumers by bringing “low fares to hundreds of routes across the country.”

Eliminating that competition “would put travel out of reach for many costconscious travelers,” the suit alleges. Officials said JetBlue planned to remove 10% to 15% of seats from Spirit planes as part of the tie-up.

“The merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers, with the greatest impact felt by those who rely on what are known as ultra-low-cost carriers in order to fly,” Attorney General Merrick Garland told reporters.

The suit emerged as the Biden administration aims to crack down on consolidation among major airlines and other industries. The legal action also comes as the feds face pressure to address a series of airline issues over the past year that has included flight cancellations and baggage-handling mishaps.

JetBlue shares fell 2.86%. Spirit Airlines shares rose 4.71%.

A JetBlue-Spirit merger would have formed the fifth-largest US airline, behind American, United, Delta and Southwest. The agreement was announced last year.

According to the complaint, Spirit’s internal estimates show that when it begins flying a route, average air fares plunge 17%, and JetBlue’s estimates show fares rise by an average of 30% when Spirit abandons a route.

JetBlue and Spirit executives had long signaled that they expected the DOJ to challenge the merger.

The airlines argue that the deal would actually increase competition by creating a larger low-fare challenger to the Big Four carriers that control 80% of the US market.

“Customers deserve a competitive airline marketplace and we will pursue this merger to ensure they get it,” JetBlue CEO Robin Hayes said.

A JetBlue-Spirit merger “would result in higher fares . . . for millions of travelers . . . who rely on . . . ultra-low-cost carriers,” AG Merrick Garland said Tuesday.