On Tuesday, the Justice Department filed a lawsuit to block JetBlue Airways from acquiring Spirit Airlines in a $3.8 billion deal.
The complaint, filed in Massachusetts in conjunction with New York and the District of Columbia, claims that the consolidation would violate antitrust laws and travel less affordable For price-sensitive consumers.
It alleges that the consolidation would “make it easier for the remaining airlines to coordinate to charge higher fares or limit capacity,” which would mean higher prices or fewer seats.
The complaint also states that Spirit’s existence as a budget airline benefits passengers because other airlines are forced to lower fares to compete.
JetBlue and Spirit responded in a news release that they would continue with plans to become the nation’s fifth largest airline. JetBlue plans to retrofit the Spirit planes by creating more legroom and adding free amenities, according to the release. The airline also argues that consolidation will force competitors to lower prices, which it calls the “JetBlue effect”.
“We believe the DOJ got it wrong on the law here and miss the point that this merger will create a national low-fare, high-quality competitor to the Big Four carriers — which will be able to compete with their own DOJ-approved mergers.” Thanks to — control about 80% of the US market, JetBlue CEO Robin Hayes said in the release. The “Big Four” carriers are American Airlines, Delta Air Lines, United Airlines and Southwest Airlines.
The suit is the latest effort by the Biden administration to counter consolidation and increase competition. In a 2021 executive order, President Joe Biden singled out a number of industries, including agriculture, information technology, health care services and prescription drugs, shipping, telecommunications and transportation.
“Companies in every industry should understand by now that this Department of Justice will not hesitate to enforce our antitrust laws and protect American consumers,” US Attorney General Merrick Garland said in the lawsuit.
It may take months for the trial of the case to begin.
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