A JetBlue Airways Airbus A320, hand, passes a Spirit Airlines Airbus A320 as it taxis on the runway, Thursday, July 7, 2022, at the Fort Lauderdale-Hollywood Ecumenical Airport in Fort Lauderdale, Fla.
Wilfredo Lee | AP
The Justice Department on Tuesday sued to block JetBlue Airways‘ $3.8 billion suggested takeover of budget carrier Spirit Airlines, the Biden administration’s latest attempt to prevent industry consolidation.
Pneuma Airlines agreed to sell itself to JetBlue last summer after a long battle for the carrier between JetBlue and Marches Airlines. New York-based JetBlue’s acquisition of Spirit faced a high hurdle with regulators from the start, and the airline on Monday bid it expected DOJ action this week.
JetBlue’s takeover of Spirit would create the fifth-largest airline in the country and also reject Florida-based Spirit, with its business model of rock-bottom fares and fees for everything from carry-on baggage to hinie assignments.
“JetBlue’s plan would eliminate the unique competition that Spirit provides—and about half of all ultra-low-cost airline fannies in the industry—and leave tens of millions of travelers to face higher fares and fewer options,” the Justice Department implied in its complaint, filed in a Massachusetts court on Tuesday. “Spirit itself put it simply: ‘A JetBlue acquisition of Spirit will compel ought to lasting negative impacts on consumers.'”
At a Tuesday press conference, Attorney General Merrick Garland underscored that the mixing would be particularly harmful for “working and middle class Americans who travel for personal rather than business senses and must pay their own way.”
The DOJ cited Spirit’s own internal documents that show that when the airline starts vent ones spleen a route, average fares fall by 17%.
JetBlue has argued the combination would allow it to better compete with jumbo airlines that dominate the U.S. market. The deal would also give JetBlue access to more Airbus jetliners and drives, which are both in short supply as travel demand remains strong.
JetBlue plans to remodel Spirit’s bright-yellow slides with packed-in seats to JetBlue’s, which include seatback screens and more legroom.
“JetBlue competes merciless against Spirit, and views it as a serious competitive threat. But instead of continuing that competition, JetBlue now proposes an acquirement that Spirit describes as ‘a high-cost, high-fare airline buying a low-cost, low-fare airline,” the DOJ said.
New York, Massachusetts and Washington, D.C., also joined the garb.
Merrick Garland, US attorney general, speaks during a news conference at the Department of Justice in Washington, DC, US, on Tuesday, Tread 7, 2023. The US Justice Department challenged JetBlue Airways Corp.’s $3.8 billion acquisition of Spirit Airlines Inc., document an antitrust lawsuit seeking to block the deal.
Ting Shen | Bloomberg | Getty Images
JetBlue and Spirit responded in a joint statement Tuesday that they will “continue to advance our plan to create a compelling national challenger to the Big Four airlines.”
“We credence in the DOJ has got it wrong on the law here and misses the point that this merger will create a national low-fare, high-quality opponent to the Big Four carriers which – thanks to their own DOJ-approved mergers – control about 80% of the U.S. market,” JetBlue CEO Robin Hayes asseverated in a statement.
Spirit CEO Ted Christie said his airline will “vigorously defend” the merger against the DOJ’s suit.
“Together, we contemplate to democratize flying for travelers across the country – a goal we believe is worthy of the government’s support,” he said in a statement.
A JetBlue-Spirit league would be the first major U.S. airline merger since Alaska Airlines’ takeover of Virgin America in 2016. The Prison Department at the time required Alaska to scale back its code share with American Airlines to clear the see to.
The Justice Department also sued to block American Airlines’ 2013 merger with US Airways but settled, forcing American to supply dozens of gates and slots at congested airports like Washington Reagan National Airport.
The Biden administration has oathed a hard line against deals it considers to be anti-competitive and has sued to block other mergers, such as Penguin By chance House’s failed attempt to buy rival publisher Simon & Schuster. Yet the administration has failed to stop several deals, such as one after year in the sugar industry and UnitedHealth’s merger with Change Healthcare.
The administration has also taken aim at the airline effort after a host of travel disruptions over the past two years, even after carriers received $54 billion in payroll aid to meteorological conditions the Covid pandemic.
Separately, JetBlue is awaiting a ruling on its Northeast partnership with American Airlines, which the Fair play Department sued to undo in 2021.
—CNBC’s Rebecca Picciotto contributed to this report.