At the beginning of a carefully watched antitrust trial, a lawyer for the U.S. Department of Justice urged a federal court on Tuesday to prevent JetBlue Airways’ (JBLU.O) planned $3.8 billion acquisition of ultra-low-cost carrier Spirit Airlines.
The Boston federal court action is a component of President Joe Biden’s administration’s larger initiative to maintain competition among low-cost carriers and guarantee that air travel stays accessible to a large number of American customers.
In her opening remarks, Justice Department lawyer Arianna Markel informed U.S. District Judge William Young that the agreement would result in fewer flights, fewer seats, and greater costs. According to her, a JetBlue internal research predicted that once Spirit, which competes with JetBlue on about 100 routes nationwide, is no longer a rival, its rates will rise by 30%. According to her, passengers would lose almost $1 billion in net worth per year.
“JetBlue is counting on the fact that eliminating Spirit and the competition Spirit provides will allow JetBlue to raise fares,” Markel stated. “That is real harm to real people.”
The sixth- and seventh-largest US airlines, JetBlue and Spirit, would combine to form the country’s first significant airline merger since Alaska Airlines acquired Virgin America in 2016. According to the Justice Department, the industry is controlled by four American airlines: United Airlines, American Airlines, Delta Air Lines, and Southwest. These airlines control 80% of the domestic market as a result of several prior airline mergers.
In an effort to allay antitrust worries from American authorities, JetBlue has referred to the agreement as pro-consumer and agreed to sell off Spirit’s gates and slots at select airports in New York City, Boston, Newark, and Fort Lauderdale.
