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DOJ Sues to Block JetBlue Airways and Spirit Airlines Merger

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DOJ Sues to Block JetBlue Airways and Spirit Airlines

DOJ Sues to Block JetBlue Airways and Spirit Airlines Merger

The Department of Justice (DOJ) sued to block a $3.8 billion merger between JetBlue Airways and Spirit Airlines on Tuesday. The lawsuit was filed in federal district court in Boston.

DOJ says that the deal would end direct competition between JetBlue and Spirit and eliminate Spirit, the nation’s biggest “ultra-low-cost carrier.” That would result in higher fares and fewer choices for passengers.

“If the acquisition is approved, JetBlue plans to abandon Spirit’s business model, remove seats from Spirit’s planes, and charge Spirit’s customers higher prices,” DOJ wrote in court filings. “JetBlue’s plan would eliminate the unique competition that Spirit provides — and about half of all ultra-low-cost airline seats in the industry — and leave tens of millions of travelers to face higher fares and fewer options.”

JetBlue said in its own statement that the two airlines “will continue to advance our plan to create a compelling national challenger to the Big Four airlines, which control about 80% of the market after years of industry consolidation that the DOJ itself approved.”

JetBlue also released new data that the company said shows how the merger could increase competition. The two airlines overlap on 11 percent of their nonstop routes, and JetBlue says it will divest all of Spirit’s holdings in Boston and New York to further reduce the overlap.

If allowed to merge, the new company would comprise about 9% of the market.

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DDG
DDGhttp://dannydealguru.com
Based in NYC. Points/miles enthusiast for years and actively writing about it for the last 6+ years at Danny the Deal Guru. I'm always looking out for deals. Making a few bucks is always nice, but the traveling is by far the best part of this business.

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1 COMMENT

  1. This deal never had a a chance. Spirit told JetBlue multiple times that this deal will never be approved by any administration.
    They even made JetBlue include a huge payment if the deal did not close. The deal had absolutely no chance of being approved. What a waste of JetBlue’s limited resources.

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