The Justice Department has made efforts to stop Jet Blue’s acquisition of budget airline Spirit.
- The Justice Department has recently sued to block JetBlue’s purchase of Spirit Airlines as the Biden administration believes it would lead to higher prices and less competition.
- The takeover would make JetBlue the fifth largest airline and eliminate Spirit’s low-cost flights that many low-budget consumers rely on for travel.
- The Justice Department says the takeover will negatively impact consumers, while JetBlue argues it will help the airline compete with large airlines that dominate the U.S. market.
Why it’s news
Last summer, Spirit Airlines agreed to sell to JetBlue for $3.8 billion.
Airline tickets have gradually increased over the last few years, and low-cost airlines have been a key factor for many consumers to afford to travel. A large low-cost airline agreed to be purchased by a top commercial airline causing the Justice Department to step in to shut down the merger before ticket prices are affected.
Last Summer, JetBlue announced that it would be taking over low-cost airline Spirit and that the airline would begin to lower its prices to compete with leading airline services, but the Justice Department has officially filed a lawsuit to block the sale.
Spirit Airlines’ business model is to create the lowest flight costs for consumers, but with JetBlue taking over the airline, it would make it the fifth largest airline service and eliminate Spirit and its low cost.
Many top airlines offer high-priced tickets because consumers will have to pay the price to travel, but when Spirit starts flying to the exact locations with low-priced tickets the airlines must drop their prices to compete with the low-cost ticket option.
The Justice Department, together with Attorneys General of the Commonwealth of Massachusetts, the State of New York, and the District of Columbia, filed a civil antitrust lawsuit to block the sale so ticket prices will not increase and hurt customers, citing Spirit’s internal documents showing that when the airline starts flying a route, average fares fall by 17%, according to the release from the department.
The department also says that Jet Blue’s acquisition is because the airline competes with Spirit, and by purchasing and dismantling the company, it will no longer have low-cost competition.
“JetBlue’s plan would eliminate the unique competition that Spirit provides—and about half of all ultra-low-cost airline seats in the industry—and leave tens of millions of travelers to face higher fares and fewer options,” the Justice Department says in its complaint. “Spirit itself put it simply: ‘A JetBlue acquisition of Spirit will have lasting negative impacts on consumers.’”