By DAVID KOENIG (AP Airlines Writer)
The Biden administration sued to dam JetBlue Airways’ $3.8 billion buy of Spirit Airlines, saying Tuesday that the deal would cut back competitors and drive up air fares for shoppers.
The Justice Department mentioned the tie-up would particularly harm cost-conscious vacationers who depend upon Spirit to seek out cheaper choices than they will discover on JetBlue and different airways.
Attorney General Merrick Garland held a information convention to announce the antitrust lawsuit — an indication of the significance that the administration locations on stopping additional consolidation within the airline trade.
“If allowed to proceed, this merger will limit choices and drive up ticket prices for passengers across the country” and “eliminate Spirit’s unique and disruptive role in the industry,” he mentioned.
The Justice Department lawsuit, filed in federal district court docket in Boston, confused that the deal would imply the top of the nation’s largest “ultra-low-cost carrier.” Those are airways that typically present the most affordable fares but in addition are likely to cost extra charges.
The Justice Department legal professionals mentioned Spirit’s demise would eradicate about half of all ultra-low-cost seats available in the market.
New York, Massachusetts and the District of Columbia joined the lawsuit. JetBlue and Spirit vowed to proceed combating to salvage their settlement.
JetBlue and Spirit have anticipated a authorized problem for weeks. The Justice Department had beforehand requested extra paperwork and depositions about JetBlue’s proposal to purchase Spirit, the nation’s largest finances airline. Negotiations over a doable settlement failed.
As alerts grew that the federal government would problem the tie-up, JetBlue CEO Robin Hayes and different firm executives launched a pre-emptive marketing campaign to make their argument that the deal would assist shoppers by making a stronger competitor to the 4 carriers that management about 80% of the home air-travel market.
Hayes mentioned Tuesday that he was dissatisfied however not stunned on the lawsuit.
“We said when we got the offer approved by the Spirit shareholders last year that we didn’t think we would close until the first half of 2024, expecting a trial,” he mentioned on “CBS Mornings.”
The lawsuit is the most recent by the Biden administration to hunt to dam mergers in industries together with video gaming, publishing and sugar refining.
In the JetBlue case, the Justice Department was underneath stress from Democratic lawmakers and client advocates who’ve complained a couple of wave of earlier mergers that left fewer airways holding a better share of the market.
The administration’s concern about airline consolidation surfaced in 2021, when the Justice Department sued to kill a restricted partnership between JetBlue and American Airlines within the Northeast. A federal decide in Boston is anticipated to situation a ruling quickly, after a non-jury trial final fall.
JetBlue held on to hope that the administration would come round to its argument that the mixture with Spirit could be far smaller than different offers and would assist shoppers by placing stress on the larger airways.
JetBlue and Spirit collectively would management a little bit over 9% of the home air-travel market, far smaller than American, Delta, United and Southwest. JetBlue executives repeatedly mentioned their deal was not like Pepsi shopping for Coca-Cola — a line that Hayes repeated Tuesday.
They mentioned the Justice Department created the setting of 4 airways dominating the market, and JetBlue merely needed a greater likelihood at competing with the giants — all of whom grew by means of mergers and acquisitions between 2008 and 2013.
The Justice Department sued to dam the final megadeal, American’s merger with US Airways, then reached a settlement that required the carriers to surrender some gates and takeoff and touchdown slots at a number of main airports. Before that, the federal government allowed Delta to purchase Northwest, United to merge with Continental, and it later let Southwest purchase AirTran.
Last yr, JetBlue torpedoed a deal between Spirit and Frontier Airlines, then beat Frontier in a bidding conflict. Frontier CEO Barry Biffle argued that regulators would block a JetBlue-Spirit deal however not a tie-up along with his airline, an identical low cost provider.
The largest union for flight attendants, the Association of Flight Attendants, reiterated its assist for the merger Tuesday, which it mentioned would raise pay and advantages for Spirit crews that it represents.
But the American Economic Liberties Project, which opposes company consolidation, praised the Justice Department for searching for to dam the deal, saying it might let JetBlue “gobble up a low-cost competitor” and increase costs.
Source: www.bostonherald.com”