The Justice Department on Tuesday filed an antitrust lawsuit against JetBlue Airways’ proposed $3.8 billion acquisition of Spirit Airlines — a merger that would create the fifth-largest U.S. airline.
The two airlines struck a deal in 2022 after Frontier Airlines’ attempt to acquire the Florida-based low-fare airline Spirit fell through. New York-based JetBlue has touted the merger as a “low-fare challenger to the Big Four airlines that dominate our industry,” alluding to United Airlines, Delta Air Lines, American Airlines and Southwest Airlines.
According to JetBlue data, the combined airline would have about 9 percent market share, compared to about 16 to 24 percent for each of the four largest airlines.
But Attorney General Merrick Garland said Tuesday that the merger would violate antitrust law, limit choice and drive up ticket prices for passengers across the country, especially for passengers who rely on low-fare airlines.
JetBlue and Spirit account for nearly 90 percent of the market for service between Boston and San Juan, Puerto Rico, he said, and on some routes, such as the one between Miami and Aguadilla, Puerto Rico, they are the only two carriers providing nonstop service.
Garland added that JetBlue intends to raise Spirit’s prices on particular routes.
“Spirit’s board of directors warned its shareholders that JetBlue's plans to reconfigure Spirit’s planes would ‘significantly diminish capacity and result in higher prices for consumers,’” Garland said. “A court will be very concerned that a JetBlue-Spirit combination will result in a higher cost, higher fare airline that would … remove about half of the ultra low-cost capacity in the United States.”
DOJ filed the civil antitrust lawsuit in the U.S. District Court for the District of Massachusetts.
In a statement released by the airlines Tuesday afternoon, JetBlue CEO Robin Hayes said the Justice Department "got it wrong on the law here and misses the point that this merger will create a national low-fare, high-quality competitor to the Big Four carriers which – thanks to their own DOJ-approved mergers – control about 80% of the U.S. market."
Hayes told "CBS Mornings" on Tuesday that he is not surprised by the lawsuit, adding that the airlines didn’t expect to close on the deal until the first half of 2024 in anticipation of a trial. Hayes added the carriers will fight the suit in court.
Lawmakers in Congress and the Transport Workers Union have been critical of the merger. Sens. Elizabeth Warren, D-Massachusetts, and Alex Padilla, D-California, sent a letter to the Transportation Department in 2022 expressing “serious concern” about the acquisition and asked the agency to use its “full statutory authority more vigorously to address increasing consolidation and dwindling competition in our airline industry.”
In its opposition to the merger, the TWU has cited “gross managerial incompetence at JetBlue Airways” and said the combination would subject workers and passengers to “the whims of corporate greed.”
Crew 'benefits'
In their joint application to the DOT for approval of the transfer of international route authorities, the carriers claim the proposed merger would "benefit crew members of both airlines,” TWU International President John Samuelsen wrote in a letter to DOJ. “We view this as flat out false when it comes to our members — every public and private statement we’ve received from management has led us to believe a combined carrier will undermine the pay and benefits of the current JetBlue flight attendants and Spirit gate agents.”
However, the Association of Flight Attendants-CWA, AFL-CIO, a flight attendants union, has supported the merger, saying that it will “fix serious concerns our union has raised for decades” and “improve competition with the Big Four airlines currently controlling 81 percent of the U.S. aviation market share.” The union has dubbed the acquisition an “anti-merger merger.”
“It is also already delivering immediate improvements for flight attendants at Spirit that would have otherwise been delayed through the regular bargaining process under the Railway Labor Act at a carrier that has yet to return to profitability following the pandemic,” union international president Sara Nelson wrote in a letter to DOJ in February.
Nelson added in the letter that the merger would also result in the reconfiguration of Spirit’s 28-inch seat pitch minimum, the “worst in the industry,” to a 32-inch seat pitch minimum, the “best in the industry.” Consumer advocates and unions have been urging the Federal Aviation Administration to set a larger seat minimum requirement, citing issues with passenger safety and comfort, but the D.C. Circuit Court of Appeals denied a petition last week to require the agency to set new minimums.
“We call on the DOJ to engage in a process to resolve its specific concerns and ensure we don’t have to wait a day longer before experiencing the benefits this combination will create for workers and consumers across the industry,” Nelson said of the suit.
