1 of 2 | JetBlue and Spirit were the target of an antitrust measure filed by state and federal attorneys general after agreeing on a merger last year. File photo by John Angelillo/UPI | License Photo
March 7 (UPI) -- Jet Blue's acquisition of rival low-cost airline Spirit would lead to higher fares and fewer available seats for U.S. air travelers, state and federal authorities said Tuesday in a lawsuit against the merger.
Following a lengthy bidding war with Frontier Airlines, Jet Blue said last year it would buy Spirit Airlines for $3.8 billion to create the fifth-largest air carrier in the United States. But even after the deal was announced, it was revealed that Spirit executives had cast doubt over whether the merger would be approved by federal regulators.
On Tuesday, the Justice Department was joined by the attorneys general of Massachusetts, New York and the District of Columbia in turning those fears into reality.
United States Attorney General Merrick Garland
said the proposed merger of JetBlue and Spirit Airlines runs afoul of antitrust regulations. Photo by Bonnie Cash/UPI
"As our complaint alleges, the merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers, with the greatest impact felt by those who rely on what are known as ultra-low-cost carriers in order to fly," U.S. Attorney General Merrick B. Garland said.
Federal data from the Bureau of Transportation Statistics show air fares are climbing, along with general consumer-level inflationary pressures. Third quarter 2020 rates, during the height of the COVID-19 pandemic, plummeted by nearly 30% from the previous year. From 2020 to 2021, however, prices spiked 22% and another 12.7% over the three-month period ending in September.
JetBlue on Monday, before the charges were filed, said would-be travelers would be able to capitalize on lower fares through the merger, however, adding the two companies compete with the likes of Delta Airlines and United Airlines, and not each other.
The so-called Big Four -- Delta, American Airlines, United and Southwest Airlines -- control 80% of the market, JetBlue argued.
The complaint, filed in Massachusetts, finds that Spirit was able to offset some of that increase by offering lower fares and more options across the country. That in turn enhanced market competition with other airlines, including JetBlue, which led to lower fares.
That would all end should JetBlue and Spirit merge.
"Companies in every industry should understand by now that this Justice Department will not hesitate to enforce our antitrust laws and protect American consumers," Garland said.
Shares in JetBlue, which made an all-cash offer for Spirit, were down during midday trading on Wall Street. Trading on the NASDAQ, Spirit shares (JBLU) were down about 0.3% as of 12:30 p.m. EST to $8.38 per share.