The Justice Department, together with Attorneys General of the Commonwealth of Massachusetts, the State of New York, and the District of Columbia, filed a civil antitrust lawsuit today to block JetBlue Airways Corporation’s (JetBlue) proposed $3.8 billion acquisition of its largest and fastest-growing ultra-low-cost rival, Spirit Airlines, Inc. (Spirit). Since JetBlue and Spirit compete fiercely today on hundreds of routes serving millions of travelers it is stated that the proposed transaction will increase fares and reduce choice on routes across the country, raising costs for the flying public and harming cost-conscious fliers most acutely.
The allegation is about Spirit’s low-cost, no-frills flying option which has brought lower fares and more options to routes across the country, thus making it possible for more Americans – particularly price sensitive consumers who pay their own fares – to travel. It is stated that JetBlue’s acquisition of Spirit would eliminate the “Spirit Effect,” where Spirit’s presence in a market forces other air carriers, including JetBlue, to lower their fares. The deal also would eliminate half of the ultra-low-cost capacity in the United States. This will lead to higher fares and fewer seats, harming millions of consumers on hundreds of routes.
JetBlue has already partnered with American Airlines, the largest airline in the world, through the Northeast Alliance, which the Department sued to block. Now, JetBlue is doubling down on consolidation, seeking to acquire and eliminate its main ultra-low-cost competitor, depriving travelers of yet another choice.
If the acquisition is allowed to proceed, prices would increase on routes where the two airlines currently compete. This is particularly the case on the over 40 direct routes where the two companies’ combined market shares are so high that the deal is presumptively anticompetitive.
(U.S Department of Justice – 07.03.2023)
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