The Biden administration’s efforts to fight against consolidation in the airline industry will face a test in court as lawyers for JetBlue Airways and the Justice Department prepare to square off. The administration is suing to block JetBlue’s proposed $3.8 billion acquisition of Spirit Airlines, which could have a significant impact on the market for low-cost airlines. Spirit Airlines is the largest budget carrier in the nation, and if JetBlue wins the case, Spirit will cease to exist.
This legal battle comes after the Justice Department’s previous success in blocking a partnership between JetBlue and American Airlines. JetBlue, although not a major player in the airline industry, argues that it needs to acquire Spirit in order to compete better against the larger airlines. JetBlue aims to expand its fleet, repaint Spirit’s planes, and improve the passenger experience. On the other hand, the Justice Department argues that Spirit is the force that needs protection, and that consumers will be better off with an independent Spirit rather than a JetBlue focused on reducing seats and raising fares.
Although JetBlue’s acquisition of Spirit will increase its market share, the airline will still be significantly smaller than American, United, Delta, or Southwest. JetBlue claims that the vacuum left by Spirit will be filled by growth from other discount airlines. However, the Justice Department argues that all airlines face limits to growth due to factors such as shortages of planes and pilots.
Spirit Airlines is known as an “ultra-low-cost carrier” that offers low fares but charges additional fees for services like checking bags or carrying on luggage. JetBlue’s offer to divest gates and landing rights to discount carriers Frontier and Allegiant was dismissed by the government, which argued that these carriers would fly the same routes as Spirit. The trial for this case will take place in Boston and will be heard by a different judge than the previous JetBlue-American case.
Overall, the Biden administration’s actions against consolidation in the airline industry demonstrate a shift from the mergers allowed by the Obama administration, which eliminated competitors to the four largest U.S. airlines. The outcome of this trial will have a significant impact on the future of low-cost airlines and competition in the industry.
