JetBlue and Spirit Airlines announced the termination of their $3.8 billion merger agreement after losing a federal antitrust lawsuit challenging the deal. According to the New York Times, the decision to terminate the agreement is a “big win” for the Biden administration which has sought to limit corporate consolidation.
The merger was blocked by a federal judge in January for fear it would reduce competition in the airline industry and raise ticket prices for travelers who are in need of more affordable flight pricing. The proposal for JetBlue to acquire the low-cost airline came in October of 2022 at which time it was agreed that JetBlue must pay Spirit $70 million plus another $400 million to Spirit’s shareholders if the merger failed.
NYT reports, “Judge William G. Young of U.S. District Court for the District of Massachusetts, noted that Spirit played a vital role in the market as a low-cost carrier and that travelers would have fewer options if JetBlue absorbed it.” If the merger was approved, JetBlue would have become the fifth largest U.S. Airline with around 10 percent of the market share. In court, JetBlue’s lawyers argued the merger would “allow it to better compete with the four large national airlines,” which include American, Delta, Southwest and United.
In December, Alaska Airlines announced a merger plan with Hawaiian Airlines to “unlock more destinations for consumers and expand choice of critical air services options and access throughout the Pacific region, Continental United States and globally.” The acquisition is worth a whopping $1.9 billion, which would give Alaska around 8% of the market if approved.
Though airline giants make the case for consolidation, they ultimately drive up prices and reduce competition making travel increasingly inaccessible to the average American.
