A JetBlue Airways Airbus A320, left, passes a Spirit Airlines Airbus A320 because it taxis on the runway, Thursday, July 7, 2022, on the Fort Lauderdale-Hollywood International Airport in Fort Lauderdale, Fla.
Wilfredo Lee | AP
The Justice Department on Tuesday sued to dam JetBlue Airways‘ $3.8 billion proposed takeover of budget carrier Spirit Airlines, the Biden administration’s latest try and prevent industry consolidation.
Spirit Airlines agreed to sell itself to JetBlue last summer after a protracted battle for the carrier between JetBlue and Frontier Airlines. Recent York-based JetBlue’s acquisition of Spirit faced a high hurdle with regulators from the beginning, and the airline on Monday said it expected DOJ motion this week.
JetBlue’s takeover of Spirit would create the fifth-largest airline within the country and likewise eliminate Florida-based Spirit, with its business model of rock-bottom fares and charges for all the pieces from carry-on baggage to seat assignments.
“JetBlue’s plan would eliminate the unique competition that Spirit provides—and about half of all ultra-low-cost airline seats within the industry—and leave tens of hundreds of thousands of travelers to face higher fares and fewer options,” the Justice Department said in its grievance, filed in a Massachusetts court on Tuesday. “Spirit itself put it simply: ‘A JetBlue acquisition of Spirit could have lasting negative impacts on consumers.'”
At a Tuesday press conference, Attorney General Merrick Garland underscored that the merger could be particularly harmful for “working and middle class Americans who travel for private moderately than business reasons and must pay their very own way.”
The DOJ cited Spirit’s own internal documents that show that when the airline starts flying a route, average fares fall by 17%.
JetBlue has argued the mixture would allow it to higher compete with large airlines that dominate the U.S. market. The deal would also give JetBlue access to more Airbus jetliners and pilots, that are each briefly supply as travel demand stays strong.
JetBlue plans to rework Spirit’s bright-yellow planes with packed-in seats to JetBlue’s, which include seatback screens and more legroom.
“JetBlue competes hard against Spirit, and views it as a serious competitive threat. But as a substitute of constant 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.
Recent York, Massachusetts and Washington, D.C., also joined the suit.
Merrick Garland, US attorney general, speaks during a news conference on the Department of Justice in Washington, DC, US, on Tuesday, March 7, 2023. The US Justice Department challenged JetBlue Airways Corp.’s $3.8 billion acquisition of Spirit Airlines Inc., filing an antitrust lawsuit in search of to dam the deal.
Ting Shen | Bloomberg | Getty Images
A JetBlue-Spirit combination could be the primary major U.S. airline merger since Alaska Airlines’ takeover of Virgin America in 2016. The Justice Department on the time required Alaska to cut back its code share with American Airlines to clear the deal.
The Justice Department also sued to dam American Airlines’ 2013 merger with US Airways but settled, forcing American to sell dozens of gates and slots at congested airports like Washington Reagan National Airport.
The Biden administration has vowed a tough line against deals it considers to be anti-competitive and has sued to dam other mergers, equivalent to Penguin Random House’s failed try and buy rival publisher Simon & Schuster. Yet the administration has didn’t stop several deals, equivalent to one last yr within the sugar industry and UnitedHealth’s merger with Change Healthcare.
The administration has also taken aim on the airline industry after a bunch of travel disruptions over the past two years, even after carriers received $54 billion in payroll aid to weather the Covid pandemic.
Individually, JetBlue is awaiting a ruling on its Northeast partnership with American Airlines, which the Justice Department sued to undo in 2021.
—CNBC’s Rebecca Picciotto contributed to this report.