If JetBlue is allowed to buy Spirit Airlines, passengers will end up paying more in airfare across the board, the US Department of Justice argues in a new lawsuit it filed Tuesday to block the merger.
That's because right now, Spirit helps push prices down in the markets where it operates. Case-in-point: Once Spirit comes to town, airfares go down an average of 17%, the DOJ says in its filing. And if it leaves a market, airfares overall in that market go up 30%, the DOJ calculates.
The DOJ says those figures prove that Spirit's competition helps keep prices low for consumers. JetBlue even admits this, the DOJ contends in its filing. "JetBlue has recognized that its own fares and revenues on a route drop significantly when Spirit enters," the DOJ says.
All that would change if JetBlue were able to take over Spirit, the DOJ says. In other words: It'd be a win for the airline and its bottom line, but a big loss for flyers.
JetBlue agreed to purchase Spirit for $3.8 billion in July 2022 after a bidding war with Frontier Airlines. JetBlue attempted to dodge the incoming lawsuit from the US government's antitrust division, releasing additional data on Monday that said JetBlue was "three times more effective than Spirit at bringing down competitor fares."
JetBlue previously stated it would reconfigure Spirit's planes if a merger were completed to remove 10-15% of their seats. It also would eliminate the brand and its ultra-low-cost model.
The elimination of Spirit would remove about half of ultra-low-cost capacity nationwide, which the DOJ says would have an adverse effect on cost-conscious fliers. Other big ultra-low-cost carriers include Allegiant Air and Frontier Airlines. They're known for bare-bones amenities, but — as advertised — super-low prices.
If the merger were to go through, the new JetBlue would become the fifth-biggest airline in the US — leapfrogging Alaska Airlines. JetBlue says bulking up would allow it to better compete with the four biggest US carriers: American, Delta, United, and Southwest.
"The Big Four airlines have a lock on about 80% of the market," JetBlue says. "JetBlue's combination with Spirit allows it to create a compelling national challenger to these dominant airlines."
The carrier also argues that Spirit and JetBlue don't primarily compete with each other. It says they overlapped only on 11% of routes.
When the New York-based carrier originally announced the intended merger, CEO Robin Hayes said the deal would allow JetBlue to grow faster. "We can go head-to-head with the legacies in more places to lower fares and improve service for everyone," he said in July 2022.
Tuesday's antitrust filing is the second against JetBlue in the past few years. The first targeted the carrier's Northeast Alliance where it coordinates with American Airlines. That case is still being reviewed by a judge.
The Tuesday lawsuit said that the agreement with American constitutes a "de facto merger" with the world's largest airline, citing language used by Spirit before the merger. The government said that further bolsters its suit that Spirit should remain independent.
