JetBlue Airways in Court Over Proposed Acquisition of Spirit Airlines
The administration is suing to block JetBlue’s proposed $3.8 billion acquisition of Spirit Airlines. The trial in federal district court in Boston could reshape the market for low-cost airlines — Spirit is by far the nation’s biggest budget carrier, and it will disappear if JetBlue wins the case.
A previous lawsuit killed a potential partnership between JetBlue and American Airlines.
JetBlue is the sixth-largest U.S. airline by revenue, and it is trying to buy the seventh-biggest. If it takes over Spirit, JetBlue will go past Alaska Airlines but still control less than 10% of the U.S. air-travel market. It would remain far smaller than American, United, Delta or Southwest.
But if JetBlue gets its way, it will grow its fleet about 70%, repaint Spirit’s yellow planes and make them less cramped inside.
The New York carrier argues that it needs Spirit to bulk up and compete better against the bigger airlines. JetBlue touts itself as “one of the most disruptive and innovative companies in the history of the airline industry,” and says it can bring down fares if it can go head-to-head against the Big Four on more routes.
The Justice Department argues, however, that Spirit is the disruptive force that needs to be protected.
“Consumers are better off with an independent Spirit, not a JetBlue intent on removing seats from planes and charging higher fares,” government lawyers argued in their pre-trial brief. They say the harm will fall hardest on cost-conscious consumers.
Spirit, which is based in Miramar, Florida, is known as an “ultra-low-cost carrier,” the name given to airlines that tout rock-bottom fares but make up for it by charging high fees for things like checking a bag or carrying one on board. Spirit even charges for soft drinks.
This isn’t the first time that the government has challenged an airline merger. In 2013, regulators sued to stop the merger of American Airlines and US Airways. The deal, which created the world’s biggest carrier, did take place after the airlines agreed to give up some gates and takeoff and landing rights.
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