The United States Department of Justice (DOJ) has filed an antitrust lawsuit in federal court in Boston to block JetBlue and Spirit’s US$3.8bn merger deal. It has also withheld the necessary certification required for JetBlue Airways Corp (JetBlue) and Spirit Airlines Inc (Spirit) to combine operations. The basis of the antitrust suit is that the merger would see the disappearance of Spirit, an ultra-low-cost carrier and with a reduction in seat availability on previously shared routes, seat prices would rise significantly.
“The merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travellers, with the greatest impact felt by those who rely on what are known as ultra-low-cost carriers in order to fly,” Attorney General Merrick Garland told reporters in Washington.
The Department of Trade has issued a separate press release stating that it fully supports the DOJ and that it would be taking its own steps to block the deal. However, the DOT has confirmed it will deny the airlines’ request for an exemption that would allow them to operate as a single carrier while they wait for final approval of the deal. The agency is also investigating the takeover request to establish whether or not it violates rules governing unfair and deceptive practices, and unfair competition.
“We will vigorously defend our position that a combined JetBlue and Spirit will be a game changer for consumers nationwide, creating the most compelling national low-fare challenger to the dominant US carriers,” Spirit Chief Executive Officer Ted Christie said in a statement from the airlines. The DOJ “has got it wrong on the law here and misses the point” that the combination would create a competitor for the four largest US airlines that control 80% of the market, JetBlue CEO Robin Hayes said.
The Justice Department cited JetBlue’s own internal research in its decision to fight the acquisition. It said the carrier’s internal calculations found that when Spirit begins flying a route, fares fall as much as 17% and rise by as much as 30% when the discount airline stops flying between cities.