Two of the largest competitors in the United States air travel industry are carrying on defiantly in their pursuit of a merger. JetBlue and Spirit Airlines have been in talks of a merger since JetBlue came out on the right side of a bidding war against Frontier Airlines in July 2022.
However, The United States Department of Justice (DOJ) has thrown a spanner in the works by filing an antitrust lawsuit saying that the deal would remove competition from Spirit. Which, it argues, could lead to higher prices and fewer options for customers.
Spirit CEO, Ted Christie aired his views on the lawsuit by saying: “We disagree with the DOJ’s decision to seek to block the proposed merger, which will benefit consumers and employees.”
“We will vigorously defend our position that a combined JetBlue and Spirit Airlines will be a game changer for customers nationwide, creating the most compelling national low-fare challenger to the dominant U.S. carriers.”
“Together, we intend to democratize flying for travelers across the country – a goal we believe is worthy of the government’s support.”
Department of Justice doesn’t support large market share
The DOJ described the deal as ‘presumptively illegal’ due to the combination of two fierce head-to-head rivals that have such a large combined market share.
This aside, the two low cost airlines have continued their plans for what they believe will bring them into the competitive picture with the current “big four” airlines in the US.
The big four, consisting of American, Delta, United and Southwest Airlines control approximately 80 percent of the air travel market in the country, after undergoing years of DOJ approved consolidation.
After hearing the news of the DOJ blocking the merger, JetBlue CEO Robin Hayes said: “Customers deserve a competitive airline marketplace and we will pursue this merger to ensure they get it, continuing to disrupt the legacy airlines with low fares and award-winning service that even the DOJ has applauded.”
We believe 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 competitor to the Big Four carriers which – thanks to their own DOJ-approved mergers – control about 80% of the U.S. market.”
Merger expects to benefit customers
When the deal is finally approved JetBlue plans to retrofit Spirit Airlines jets with seats that increase leg room and install more onboard amenities that have become synonymous with the New York based low-cost carrier.
Removing seats to improve comfort then has a knock on effect of improving aircraft utilisation. By replacing the seats lost during the retrofit process by providing more flights to customers, enables the airline to offer more of its low cost seats in its ‘Blue Basic’ fares range.
“Putting the JetBlue’s increased legroom and free amenities on Spirit aircraft is a big win for consumers, and we can offset any loss of seats with increased flying and through ULCC growth.”
“You shouldn’t have to choose between a low fare and a great experience, so the government should celebrate an expansion of JetBlue’s low fares and customer favorites like the most legroom in coach, free Wi-Fi, live seatback TV, and free snacks coming to Spirit’s fleet.”
Initial discouraging concerns coming out of the state of Florida have now been laid to rest, and a settlement reached with the state vocally supporting the merger.
Combining the two airlines would see a minimum of a 50% increase on seats flying from Fort Lauderdale and Orlando, which will bring further slot utilisation and the possibility of over 50 new routes out of the state.
Not only have they committed to keeping all current work facilities by both airlines, but the merger anticipates the need for at least 2,000 more jobs for locals of the Sunshine State.
Providing the merger goes through, it would see the creation of the fifth biggest US airline.