In a head-spinning 24 hours, the landscape of commercial aviation in the U.S. radically changed as JetBlue announced Thursday it would acquire Spirit Airlines shortly after Spirit shareholders rejected a merger with Frontier Airlines.
The move immediately prompted questions about what the future holds for the merged carrier, its competitors and the airports they serve.
If the acquisition passes federal muster, it would create the fifth-largest airline in the U.S.
“Today’s news that JetBlue is acquiring Spirit represents an opportunity for Pittsburgh,” said Bryan Dietz, Senior Vice President of Air Service and Commercial Development at PIT.
“Each carrier has developed a strong franchise at PIT—including no overlapping routes—with a loyal passenger base to markets where Pittsburghers want to fly. We have strong relationships with both management teams and are excited to see what the future holds for the combined airline.”
In Pittsburgh, Spirit is the fifth-largest airline, carrying nearly 10 percent of 2022 traffic through June. JetBlue is seventh-largest, carrying nearly 2 percent of passenger traffic.
Spirit has steadily grown at PIT since its arrival in May 2017 and serves nine destinations, including seasonal markets, while JetBlue is currently serving 26 flights per week to Boston.
Some experts agreed with Dietz that PIT’s prospects are bright. Bijan Vasigh, an aviation consultant and professor at Embry-Riddle Aeronautical University in Florida, said medium-size airports like Pittsburgh could benefit from the merger.
“My expectation is expansion (of the merged carrier) would be in medium-sized markets,” Vasigh said. “Traffic at medium-sized airports should be benefitting.”
Particularly with JetBlue, he said, its future growth in New York could be constrained and the carrier will look elsewhere for growth opportunities. Pittsburgh is already a successful growth market for Spirit, he said.
Greg Atkin of Ailevon Pacific Aviation Consulting concurred and noted that the merger creates space for competition among ultra-low-cost carriers, which can strengthen mid-sized airport service portfolios.
“This merger is good news for the other remaining ULCCs as the new carrier will no longer be in the ULCC space; it will now be in the LCC space,” he said. “This will create openings in the (national) marketplace for carriers.”
ULCCs serving PIT include Allegiant, Frontier, Sun Country and Breeze.
JetBlue’s bid came after the Frontier proposal was first announced in February. And on Wednesday, investors chose JetBlue’s all-cash, higher price over Frontier’s stock-and-cash plan after months of competing offers and debate about which path would be more likely to receive regulatory approval.
“We are thrilled to unite with JetBlue through our improved agreement to create the most compelling national low-fare challenger to the dominant U.S. carriers,” said Spirit CEO Ted Christie in a statement.
“Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to bring down fares from the Big Four airlines,” said Robin Hayes, CEO of JetBlue. “This combination is an exciting opportunity to diversify and expand our network, add jobs and new possibilities for crewmembers, and expand our platform for profitable growth.”
We’re proud to announce JetBlue & @SpiritAirlines will come together to create a bigger, better JetBlue. After closing, we will offer 1700+ daily flights to 125+ destinations—and the low fares and award-winning service you know and love. Learn more: https://t.co/K0uz5rX3A1 pic.twitter.com/CjKzkhLJXO
— JetBlue (@JetBlue) July 28, 2022
The airlines said they will continue to operate independently until the deal closes; their loyalty programs will remain unchanged and customer accounts will not be affected in any way.
At $33.50 per share, the JetBlue deal is about $1 billion higher than the Frontier bid. Spirit owes Frontier $25 million for costs incurred during the merger talks and may owe another $69 million if the JetBlue deal closes in the next 12 months.
For its part, Frontier is looking at the failed merger as an opportunity, with one of its major low-cost competitors now gone.
“Frontier remains America’s lowest-fare, lowest-cost airline that features the industry’s youngest, most fuel-efficient fleet, a robust order book, and a strong balance sheet,” Barry Biffle, CEO of Frontier, said in a statement. “With the price-sensitive segment projected to grow, we are just getting started.”
As part of its response, the carrier announced it would offer 1 million passengers seats starting at $19.