Skift Take
Economical air travel for U.S. customers and control of the domestic market remains main to the JetBlue-Spirit merger lawsuit.
Selene Brophy
The U.S. Department of Justice heads to trial on Tuesday to prompt a federal judge to obstruct JetBlue Airways’ scheduled $3.8 billion acquisition of ultra-low-cost provider Spirit Airlines.
The case in federal court in Boston is part of a broad effort by President Joe Biden’s administration to preserve competitors amongst the lowest cost airline companies, making sure flight remains inexpensive for a lot more United States customers.
The trial will happen without a jury over about 3 weeks before U.S. District Judge William Young. At a hearing in March, Young said he felt an “commitment” to attempt to rule by year’s end.
A merger in between JetBlue and Spirit, the 6th and seventh largest U.S. carriers, respectively, would mark the first significant U.S. airline company mix since Alaska Airlines purchased Virgin America in 2016.
The sector is controlled by four U.S. providers– United Airlines, American Airlines, Delta Air Lines and Southwest– who control 80% of the domestic market following a series of previous airline mergers, the Justice Department has stated.
JetBlue has actually called the offer pro-consumer and has looked for to ease U.S. regulators’ antitrust issues by agreeing to sell off Spirit’s gates and slots at certain airports in New York City, Boston, Newark and Fort Lauderdale.
However the Justice Department has stated those divestitures are not enough, and in a lawsuit submitted in March argued the combined airline company would harm consumers by increasing fares and decreasing choice on paths nationwide.
The department is suing together with Democratic attorneys general from 6 states and the District of Columbia. They call Spirit a “disruptive and innovative airline company” whose low-cost, no-frills model has actually required rate cuts industry-wide.
The Justice Department alleges the merger would eliminate the pressure larger airlines, including JetBlue, face to reduce their fares in action to competition from Spirit and cost customers over $2 billion in higher fares every year.
“The transaction assures to replace Spirit with a higher-cost airline that offers fewer seats, charges greater fares, and is less likely to disturb other airline companies’ higher costs,” the department said in a court filing ahead of trial.
The airline companies counter that enabling the deal to move forward would reinforce JetBlue’s own long-standing reputation as a market disruptor.
While JetBlue would become the nation’s fifth-largest airline, its legal representatives say it would still just have less than 10% market share locally.
JetBlue in a declaration said “our combination with Spirit is the very best opportunity to disrupt the industry by increasing competition and option, developing a long past due national low-fare challenger to the dominant Big Four airlines.”
The department’s case belongs to a broader push by the Biden administration to aggressively step up antitrust enforcement, an effort that has had mixed results in court.
JetBlue was currently the focus of one of its earlier cases, with a different Boston judge, Leo Sorokin, in Might siding with the government in discovering that JetBlue’s U.S. Northeast partnership with American Airlines broke antitrust law.
JetBlue subsequently decided to terminate the alliance. American Airlines is appealing Sorokin’s choice.
Reporting by Nate Raymond in Boston, Modifying by Alexia Garamfalvi and Nick Zieminski. Copyright (2023) Thomson Reuters. Click for limitations
This article was composed by Nate Raymond from Reuters and was lawfully accredited through the DiveMarketplace by Market Dive. Please direct all licensing questions to [email protected]
< img alt ="" data-src="https://pixel.welcomesoftware.com/px.gif?key=YXJ0aWNsZT1iYzhiMmNlYTc3ZTMxMWVlYjlmM2JhZjZkYjlmYzMwNQ==" src="image/gif; base64, R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw = ="/ > < img src="https://pixel.welcomesoftware.com/px.gif?key=YXJ0aWNsZT1iYzhiMmNlYTc3ZTMxMWVlYjlmM2JhZjZkYjlmYzMwNQ==" alt =""/ >