Thanks to the merger with competitor Spirit, Jetblue wants to play with the big players in the USA. But a prominent politician tries to prevent that.
Jetblue knew that there might be a headwind. As early as the American airline announcedthat it was awarded the contract to buy competitor Spirit, it tried to nip the competition authorities’ doubts in the bud. “Even as the fifth largest airline, Jetblue would only have a 9 percent market share with Spirit,” she argued.
That’s nothing compared to the competition. According to the latest figures from the Ministry of Transport, however, the two have a market share of 10.3 percent. United comes fourth at 14.6 percent, Delta and Southwest joint second at 17.1 percent, and American at the top at 18.1 percent.
Jetblue’s argument “doesn’t work”
Elizabeth Warren is this too much. The senator, who also wanted to become President of the USA in 2020 but lost to Joe Biden in the primaries, wants to prevent the merger of the two airlines. in one Brief She explains her reasons to Transport Secretary Pete Buttigieg, who, like her, is a Democrat.
“The competitive situation in the aviation industry is in free fall and consumers are feeling the consequences,” said the politician. “Today, the four largest airlines – American, Southwest, Delta and United – control 80 percent of the domestic market, more than at any time in the modern history of commercial aviation.” Jetblue’s argument that the competitive situation would improve with a new major airline does not work that way.
Only one ultra-low-cost airline
Because: After a merger, there should only be Jetblue. Frontier remains the only ultra-low-cost airline in the USA. Even if the enlarged airline advertises with low tariffs – the business model is different. Warren criticizes that. As a result, prices for customers would rise.
In her letter to Transportation Secretary Pete Buttigieg, the senator urged the Department of Transportation to block the merger. And it’s reminiscent of a law from the 1950s that allowed the Department of Transportation to do just that. That usually leaves the decision on the compatibility of airline mergers with antitrust laws to the Department of Justice. In case of doubt, the latter then has to prove that a merger would harm competition.
«Under use»
The Department of Transportation might have it more directly though. It can simply decide that the merger is not in the public interest. That’s a power it’s had since the Federal Aviation Administration FAA was formed in 1958.
“The US Department of Transportation has significant and historically underutilized powers to protect competition in the domestic aviation market to ensure that all route transfers are in the public interest,” Warren said. She hasn’t received an answer yet.
Jetblue made concessions
In fact, there is another reason why the merger might still burst. Works in Northeastern United States Jetblue already with American Airlines together. Allianz has already called the competition authorities into action, and proceedings are ongoing.
Jetblue has an answer for that too. The alliance with American Airlines in the Northeast helps competition in a region “where Delta Air Lines and United Airlines previously had limited competition and where Jetblue was barred from future growth in slot-limited and congested airports.” However, they have committed to selling Spirit’s slots at the relevant airports so that other ultra-low-cost airlines can keep them and keep prices low. Whether that’s enough remains to be seen.
