For the second time in three years, the U.S. Department of Justice has sued JetBlue Airways, filing a complaint Tuesday in Boston to block the airline’s proposed $3.8 billion acquisition of Spirit Airlines.
The move did not come as a surprise, as legal experts and industry observers expected federal regulators to take a very close look at the merger before it was even formally accepted by Spirit shareholders.
The offer, approved in October, would create the nation’s fifth-largest airline and came after months of contentious bidding against Frontier Airlines, which announced plans to merge with Spirit in early 2022.
The Justice Department has been particularly vigilant about enforcing antitrust laws under President Joe Biden, and JetBlue is already awaiting a decision in a 2021 DOJ suit blocking the airline’s intended alliance with American Airlines in the northeast U.S.
JetBlue CEO Robin Hayes has said the JetBlue-Spirit combination would challenge the industry’s “big four” airlines—American, Delta, United and Southwest—with a “low-fare high-quality airline to compete on a more national scale.”
According to the DOJ’s complaint, that’s not a good result for customers.
“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 DOJ said in its filing.
JetBlue announced plans to remodel Spirit aircraft to its specifications, which include more legroom and amenities—and reduce the number of seats on each plane.
“Fewer seats means fewer passengers—and higher prices for those who can still afford to make their way onto the plane,” the complaint said.
Massachusetts, New York and Washington, D.C., joined the Justice Department’s complaint.
JetBlue CEO Robin Hayes expressed disappointment with the Justice Department’s suit, but stated it was expected. He said the agreement’s timeline was built out with the expectation that the federal government would sue to block the merger.
“We said when we we got the offer approved by Spirit’s shareholders [last July], we would close the merger in the first half of 2024 expecting a trial,” Hayes told CBS Morning News.
Hayes reiterated that JetBlue merged together with Spirit would still be “a distant fifth” in size relative compared to legacy carriers, which make up 40 percent of the market.
“What we are trying to do is make a bigger JetBlue to bring the JetBlue brand, product, people and fares more nationally than we can do today.” he said. “This isn’t Pepsi buying Coke.”