The ongoing process by JetBlue Airways to acquire Spirit Airlines has hit a new hurdle. Namely, according to Josh Sisco of Politico, the Biden administration intends to take antitrust action to stop the upcoming merger.

Under investigation

To this end, the US Department of Justice is expanding its antitrust investigation team looking into the acquisition. The reason why antitrust law is at issue is concerns about loss of competition in airline service. The loss of competition would equate to higher airfares and reduced service.

There are also concerns about the ongoing litigation between American Airlines and JetBlue Airways over Northeast United States routes. Given that this is not a full merger, it raises questions about the appetite to approve a fresh takeover, one of the highest-profile airline mergers in a few years.

This contrasts Simple Flying’s recent reporting that Spirit Airlines leaders expected a decision within 30 days. Spirit Airlines President and CEO Ted Christie commented,

Timeline expanded

It now appears Christie should expect another lawsuit. This is after litigation from Florida travel agents and average travelers worried that JetBlue’s acquisition of Spirit will translate into higher airfares from less competition at and between Fort Lauderdale-Hollywood (FLL) and Orlando (MCO) international airports.

Days earlier, JetBlue’s President Joanna Geraghty explained why the merger should proceed without the Department of Justice taking action. Geraghty noted,

"We want to be bigger. This is about jobs. This is about growth. We hope that the Justice Department recognizes that a bigger JetBlue is a great thing for consumers."

Photo: Vincenzo Pace | Simple Flying.

Geraghty went on to say, "we hope we don't get to the point of litigation," over JetBlue acquiring Spirit to combined be 10% of the US airline market. So where does this leave the deal?

The DOJ's current track record

The best way to judge the next steps in the JetBlue-Spirit merger from a regulatory view is to study the ongoing legal challenges against JetBlue and American's Northeast Alliance. Founded in 2020, the alliance between the two carriers aims to increase connectivity and efficiency by linking ticket sales and frequent flyer programs. However, the DOJ contends that the alliance causes anticompetitive behavior and higher fares in slot-constrained Northeastern United States airports.

As Simple Flying explained, the collaboration allows American to exchange slots with JetBlue between airports, enabling more route options for customers. American is consolidating at New York's John F. Kennedy International Airport (JFK), while JetBlue has been expanding its route network out of the New York City metro area’s three primary airports. The alliance has shown no signs of slowing this year, with 11 more routes scheduled soon.

Photo: NYC Russ / Shutterstock

Ironically, Spirit Airways is against the Northeast Alliance. Spirit Airways as an independent entity is concerned about the anti-competitive nature of the alliance. It is also worth noting that Spirit Airlines and Frontier Airlines attempted to merge before Spirit Airlines decided to merge with JetBlue Airways instead. Indeed, the risk of regulatory failure was baked into the deal, with a $350 million breakup payout for Spirit if the DOJ and courts block the deal.

Now, the authorities will look into the effects of the merger on the market and decide if it can proceed with some concessions. This may include surrendering some slots at key airports and maintaining service on select routes, or more drastic measures. Alternatively, the deal could be blocked altogether, setting up a complex legal battle ahead.

Source: Politico, Reuters