CONSUMER

US sues to block JetBlue from buying Spirit Airlines

Mar 7, 2023, 11:43 AM

FILE - A JetBlue Airways Airbus A320, left, passes a Spirit Airlines Airbus A320 as it taxis on the...

FILE - A JetBlue Airways Airbus A320, left, passes a Spirit Airlines Airbus A320 as it taxis on the runway, July 7, 2022, at the Fort Lauderdale-Hollywood International Airport in Fort Lauderdale, Fla. The Biden administration wants to block JetBlue from buying Spirit Airlines, saying the deal would reduce competition and hurt travelers. (AP Photo/Wilfredo Lee, File)
Credit: ASSOCIATED PRESS

(AP Photo/Wilfredo Lee, File)

The Biden administration sued to block JetBlue Airways’ $3.8 billion purchase of Spirit Airlines, saying Tuesday that the deal would reduce competition and drive up air fares for consumers.

The Justice Department said the tie-up would especially hurt cost-conscious travelers who depend on Spirit to find cheaper options than they can find on JetBlue and other airlines.

Attorney General Merrick Garland held a news conference to announce the antitrust lawsuit — a sign of the importance that the administration places on stopping further consolidation in the airline industry.

“If allowed to proceed, this merger will limit choices and drive up ticket prices for passengers across the country” and “eliminate Spirit’s unique and disruptive role in the industry,” he said.

The Justice Department lawsuit, filed in federal district court in Boston, stressed that the deal would mean the end of the nation’s biggest “ultra-low-cost carrier.” Those are airlines that generally provide the cheapest fares but also tend to charge more fees.

The Justice Department lawyers said Spirit’s demise would eliminate about half of all ultra-low-cost seats in the market.

New York, Massachusetts and the District of Columbia joined the lawsuit. JetBlue and Spirit vowed to continue fighting to salvage their agreement.

JetBlue and Spirit have anticipated a legal challenge for weeks. The Justice Department had previously requested additional documents and depositions about JetBlue’s proposal to buy Spirit, the nation’s biggest budget airline. Negotiations over a possible settlement failed.

As signals grew that the government would challenge the tie-up, JetBlue CEO Robin Hayes and other company executives launched a pre-emptive campaign to make their argument that the deal would help consumers by creating a stronger competitor to the four carriers that control about 80% of the domestic air-travel market.

JetBlue agrees to buy Spirit for $3.8 billion

Hayes said Tuesday that he was disappointed but not surprised at the lawsuit.

“We said when we got the offer approved by the Spirit shareholders last year that we didn’t think we would close until the first half of 2024, expecting a trial,” he said on “CBS Mornings.”

The lawsuit is the latest by the Biden administration to seek to block mergers in industries including video gamingpublishing and sugar refining.

In the JetBlue case, the Justice Department was under pressure from Democratic lawmakers and consumer advocates who have complained about a wave of earlier mergers that left fewer airlines holding a greater share of the market.

The administration’s concern about airline consolidation surfaced in 2021, when the Justice Department sued to kill a limited partnership between JetBlue and American Airlines in the Northeast. A federal judge in Boston is expected to issue a ruling soon, after a non-jury trial last fall.

JetBlue held on to hope that the administration would come around to its argument that the combination with Spirit would be far smaller than other deals and would help consumers by putting pressure on the bigger airlines.

JetBlue and Spirit together would control a little over 9% of the domestic air-travel market, far smaller than American, Delta, United and Southwest. JetBlue executives repeatedly said their deal was not like Pepsi buying Coca-Cola — a line that Hayes repeated Tuesday.

They said the Justice Department created the environment of four airlines dominating the market, and JetBlue merely wanted a better chance at competing with the giants — all of whom grew through mergers and acquisitions between 2008 and 2013.

The Justice Department sued to block the last megadeal, American’s merger with US Airways, then reached a settlement that required the carriers to give up some gates and takeoff and landing slots at several major airports. Before that, the government allowed Delta to buy Northwest, United to merge with Continental, and it later let Southwest buy AirTran.

Last year, JetBlue torpedoed a deal between Spirit and Frontier Airlines, then beat Frontier in a bidding war. Frontier CEO Barry Biffle argued that regulators would block a JetBlue-Spirit deal but not a tie-up with his airline, a similar discount carrier.

The largest union for flight attendants, the Association of Flight Attendants, reiterated its support for the merger Tuesday, which it said would lift pay and benefits for Spirit crews that it represents.

But the American Economic Liberties Project, which opposes corporate consolidation, praised the Justice Department for seeking to block the deal, saying it would let JetBlue “gobble up a low-cost competitor” and boost prices.

KSL 5 TV Live

Consumer

FILE - A sign advertises Yeezy shoes made by Adidas at Kickclusive, a sneaker resale store, in Para...

Associated Press

Adidas sells another batch of Yeezy sneakers left over from breakup with Ye

Shoe and sports clothing maker Adidas says it has started a third sale of the Yeezy sneakers it was left with after severing ties with Ye, the rapper formerly known as Kanye West.

18 hours ago

This photo provided by RR Auction shows a watch melted during the Aug.6, 1945 bombing of Hiroshima....

Steve LeBlanc, Associated Press

A watch that melted during the atomic blast over Hiroshima, Japan, sells for more than $31,000

A watch melted during the Aug. 6, 1945, bombing of Hiroshima, Japan, sold at auction Thursday for more than $31,000.

2 days ago

(Photo by Tomohiro Ohsumi/Getty Images)...

Associated Press

Toyota recalls 280,000 pickups and SUVs because transmissions can deliver power even when in neutral

The recall is to fix a transmission problem that can let the vehicles creep forward while in neutral.

4 days ago

A sunset spectacle featuring two mitten-shaped rock formations crosses Monument Valley Tribal Park ...

Michael Phillis, Associated Press

Native American tribes gain new authority to stop unwanted hydropower projects

The U.S. Federal Energy Regulatory Commission has rejected several proposed hydropower projects on the largest Native American reservation in the U.S. The commission has also created a policy that essentially gives tribes early veto power over such projects.

4 days ago

New Jersey Devils goaltender Akira Schmid, front left, makes a save in front of New York Rangers ri...

Lindsay Aerts

Bill to raise SLC tax for NHL stadium funding advances, SLC leaders supportive

Over the last two days the Utah legislature has unveiled two major plans to help finance major league sports stadiums. On Thursday a Senate committee advanced the plan to fund the National Hockey League stadium and a “sports and entertainment” district downtown, which includes a sales tax increase of up to .5% in Salt Lake City.

5 days ago

Henry Barlow inside his cattle processing plant...

Alex Cabrero

‘We are going to feed American beef to the Americans’: Meat packing plant to open in Richfield

A new cattle processing plant in central Utah is expected to improve the state's food supply chain.

5 days ago

Sponsored Articles

Modern chandelier hanging from a white slanted ceiling with windows in the backgruond...

Lighting Design

Light Up Your Home With These Top Lighting Trends for 2024

Check out the latest lighting design trends for 2024 and tips on how you can incorporate them into your home.

Technician woman fixing hardware of desktop computer. Close up....

PC Laptops

Tips for Hassle-Free Computer Repairs

Experiencing a glitch in your computer can be frustrating, but with these tips you can have your computer repaired without the stress.

Close up of finger on keyboard button with number 11 logo...

PC Laptops

7 Reasons Why You Should Upgrade Your Laptop to Windows 11

Explore the benefits of upgrading to Windows 11 for a smoother, more secure, and feature-packed computing experience.

Stylish room interior with beautiful Christmas tree and decorative fireplace...

Lighting Design

Create a Festive Home with Our Easy-to-Follow Holiday Prep Guide

Get ready for festive celebrations! Discover expert tips to prepare your home for the holidays, creating a warm and welcoming atmosphere for unforgettable moments.

Battery low message on mobile device screen. Internet and technology concept...

PC Laptops

9 Tips to Get More Power Out of Your Laptop Battery

Get more power out of your laptop battery and help it last longer by implementing some of these tips from our guide.

Users display warnings about the use of artificial intelligence (AI), access to malicious software ...

Les Olson

How to Stay Safe from Cybersecurity Threats

Read our tips for reading for how to respond to rising cybersecurity threats in 2023 and beyond to keep yourself and your company safe.

US sues to block JetBlue from buying Spirit Airlines