JetBlue and Spirit Won’t Merge After All. Is That a Good Thing?

25.01.2024 - 00:08 / afar.com / Spirit Airlines

On January 16, a federal court judge ruled to block JetBlue Airways’ proposed $3.8 billion purchase of Spirit Airlines on antitrust grounds. The decision was made based on a U.S. Justice Department lawsuit filed in March 2023 and aimed at stopping the deal. According to the suit, the merger would “allow JetBlue to eliminate its largest ultra-low-cost rival, further concentrate the airline industry, and harm American travelers.”

The JetBlue-Spirit merger was rejected by a federal judge who found that it violated the Clayton Antitrust Act, which prohibits mergers and acquisitions when “the effect of such acquisition may be substantially to lessen competition.”

Given that JetBlue’s routes and Spirit Airlines’ routes overlap in many markets, the merger would have lessened competition in those markets. JetBlue’s declaration that it planned to reduce the number of seats on acquired Spirit Airlines aircraft didn’t help its case, nor did its blunder of accidentally revealing a plan to increase fares by up to 40 percent after the merger, according to a report from Law360.

JetBlue argued the merger would in fact increase market competition by making the company a more viable competitor against the “Big 4” airlines (American, Delta, Southwest, and United), providing increased choice for consumers. However, the judge ruled that it would be the “large category of consumers, those who must rely on Spirit (for discounted prices), that this merger would harm; the defendant airline . . . simply cannot demonstrate that these consumers would avoid harm.”

“Today’s ruling is a victory for tens of millions of travelers who would have faced higher fares and fewer choices had the proposed merger between JetBlue and Spirit been allowed to move forward,” stated Attorney General Merrick Garland in a press release about the U.S. District Court of Massachusetts decision.

With the blocked merger, JetBlue and Spirit Airlines are set to continue operations as is, pending a potential appeal of the ruling, a modified merger offer from JetBlue protecting the fare structure and routes, or an offer from a different carrier. For example, were Frontier Airlines to renew its 2022 merger bid to create a combined budget airline with Spirit, such a bid might win the Justice Department’s approval, given the protection of the discount fare model and the smaller overlap of their routes.

For the time being, Spirit’s low-cost fares will probably remain in place, and Spirit’s competitors on its routes must consider those fares when pricing their own flights. Thus, even if you don’t ever plan to fly Spirit Airlines, airfares on routes that Spirit flies are likely to remain cheaper. This is what the Justice Department lawyers called the “Spirit