The Justice Department filed suit Tuesday to stop JetBlue Airways taking over Spirit Airlines under a $3.8 million deal.
The complaint was filed in Massachusetts along with New York City and the District of Columbia. It claims that the consolidation would be in violation of antitrust laws and make travel more expensive to price-sensitive customers.
The consolidation “would make it easier for the remaining carriers to coordinate to charge higher airfares or limit capacity,” which would result in higher prices and fewer seats.
The complaint claims that Spirit’s existence is a benefit to travelers as other airlines are forced lower fares in order to compete.
JetBlue and Spirit announced in a press release that they will continue to work towards becoming the fifth largest airline in the country. According to the release, JetBlue will retrofit Spirit planes with more legroom and other amenities. JetBlue also claims that consolidation will force other airlines to lower prices. This is called the “JetBlue effect span>
Robin Hayes, JetBlue CEO, stated in the release that “we believe the DOJ is wrong on the law and misses it the point that this merger creates a national low cost, high-quality competitor for the Big Four carriers who — thanks to their own DOJ approved mergers — control approximately 80% of U.S. markets.” The “Big Four” airlines are American Airlines (Delta Air Lines), United Airlines (United Airlines) and Southwest Airlines.
This suit is the latest attempt by the Biden administration against consolidation and to increase competition. In an executive order dated 2021, President Joe Biden identified multiple industries such as agriculture, information technology and health care services, prescription drugs, shipping and telecommunications, and transportation.
“Companies from all industries should now understand that the Justice Department will not hesitate enforce our antitrust laws, and protect American consumers,” U.S. attorney General Merrick Garland stated in the suit.
It could take several months for the case to go to trial.