T-Mobile had to jump through various federal government regulatory hoops when it wanted to buy Sprint. Essentially, the Department of Justice (DOJ) got hung up on the idea that a market which had four competitors would have three if the deal was allowed.
The DOJ ignored that Sprint was weak competition for Verizon and AT&T at best and that a stronger T-Mobile was actually the best way to deliver consumer choice. It also ignored that a valuable market with limited players would also attract new companies which has happened as both Comcast and Charter Communications, the two biggest cable and internet service providers in the United States, now offer wireless phone service.
DON'T MISS: Southwest Airlines Makes Customers a Very Generous Offer
In the case of the Spirit (SAVE) and JetBlue (JBLU) $3.8 billion merger, the DOJ issue is not entirely that the deal will lead to fewer choices for consumers. The issue is more that the U.S. would lose its largest low-cost carrier.
That's true, but it's largely irrelevant because "low-cost" airlines, including Spirit, are largely a marketing play, not an actual different take on air travel. It's about how prices are presented not getting a price that's much cheaper than a conventional carrier.
Shutterstock
Here's How Spirit Airlines Prices Work
I'm a frequent flyer who will generally trade comfort for price within reason. In 2019, the year before covid, I took roughly 15 round-trip plane flights, most of them on Southwest (LUV) with a few on JetBlue. And, while my pace of travel was slowed by the pandemic, I have flown Southwest, JetBlue, Spirit, Frontier, and Allegiant all at least once over the past few years.
Southwest and JetBlue are low-cost carriers with the major difference being that all Southwest tickets include checked bags while the lowest-tier JetBlue fares do not. But, in both cases, the airlines give you an upfront price that's mostly "what you see is what you get."
Low-cost carriers operate differently. Spirit, Allegiant, Frontier, and other carriers in this space sell you a ticket that does not include the following:
- Carry-on bag (you are limited to a small personal bag like a purse)
- Checked bags
- Seat assignment (you get one at the gate after everyone who has paid for one)
- A guarantee your party/family will sit together
- Soda, water, and other non-alcoholic beverages
In very rare cases, I have flown using just a basic fare, no add-ons ticket on low-cost carriers. You might be able to do that if you're flying back and forth on the same day or flying between properties you own so there's no reason to bring stuff with you.
Most people, however, rarely fly like that and they need carry-on bags and/or checked luggage. That means that costs advertised in the basic fare aren't what most people pay and consumers know that.
The Low-Cost Airline Model Is Not Unique to Low-Cost Airlines
Major airlines including Delta (DAL) and United Airlines (UAL) offer a variant of the low-cost model, which they call 'Basic Economy." Those are fares that don't include carry-on bags, checked bags, or a seat assignment with all of those things being sold separately.
Letting JetBlue merge with Spirit will give consumers broader access to transparent pricing. Yes, it will cut down on ultra-low-cost options, but few people actually end up paying those prices. JetBlue, like Southwest, tells you very clearly what your flight will actually cost you.
The U.S. government is literally fighting to preserve a pricing practice that simply spreads out the pain of higher prices. Yes, you pay a lower ticket price, but unless you fly without luggage, that's not in any way the actual cost of your ticket.
Americans have a lot of travel options and more JetBlue, and no more Spirirt, well, that's addition by subtraction for most flyers.
