In a complaint, the US Department of Justice considers that the operation would particularly affect low-income consumers.
By Le Figaro with AFP
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The US Department of Justice filed a lawsuit on Tuesday opposing airline JetBlue’s takeover of rival Spirit Airlines, saying the deal would lead to higher prices and fewer options for passengers. Spirit accepted JetBlue’s $3.8 billion offer last Julyafter however stressing for several months that the competition authorities would undoubtedly be reluctant with regard to a merger between the two companies.
With its very low-cost ticket business model, Spirit “increased competition and lowered fares on hundreds of routes across the country”, underlines the ministry in its complaint, consulted by AFP. But JetBlue wants abandon this model, “reduce the number of seats in Spirit planes” and “charge customers more” of the company, says the ministry.
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The operation would particularly affect low-income consumers who rely on ultra-low-cost airlines to travel, and not those who are reimbursed for their expenses when they travel in business class, underlined the American Secretary of Justice, Merrick Garland, during a press conference. Since Joe Biden came to power, the American authorities responsible for combating anti-competitive practices have hardened their position and opposed several mergers, with varying degrees of success.
The country’s fifth-largest airline
JetBlue and Spirit, in a press release, indicated that they wanted to continue the operation. “We believe the Department of Justice is getting the law wrong and fails to understand that this merger will create a powerful, low-cost national competitor”, against the four companies currently dominating the sector, said the general manager of JetBlue, Robin Hayes, in the message. According to the authorities, American, United, Delta and Southwest currently control 80% of the market in the United States, ahead of Alaska Airlines, JetBlue and Spirit. Combined, JetBlue and Spirit would become the nation’s fifth-largest airline.
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Anticipating lawsuits, JetBlue had published an argument on its website on Monday evening claiming that its entry into a market always resulted in a reduction in prices and that JetBlue and Spirit only competed on a limited number of lines. The company also highlights the fact that it has agreed to sell some lines and airport slots to other companies at very low cost.
Spirit had announced in February 2022 its intention to get closer to Frontier. But JetBlue had created the surprise a few weeks later by filing in turn an offer, financially more interesting for the shareholders of Spirit. However, Spirit’s board of directors initially opposed it, highlighting the risks of blockage by the competition authorities.
JetBlue has also agreed to pay termination fees of $70 million to Spirit and $400 million to Spirit shareholders if regulators veto the deal. The company has already been prosecuted since 2021 by competition authorities for its partnership with American Airlines on routes departing from New York and Boston, the Ministry of Justice notably considering that the alliance would probably encourage JetBlue not to compete head-on with American at other airports. The action of JetBlue fell 2.8% at the end of the session on Wall Street while that of Spirit rose 4.7%.
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