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Trial to determine whether JetBlue can buy Spirit, further consolidating industry, comes to a head

by Gabriel Martinez
11 comments
Airline Merger Trial

The trial to determine whether JetBlue can proceed with its $3.8 billion acquisition of Spirit Airlines, the nation’s largest low-fare carrier, is reaching its conclusion. Lawyers representing the Justice Department and JetBlue Airways are set to present their closing arguments in this pivotal case.

The Justice Department’s primary contention is that this proposed merger could have adverse consequences for consumers. They argue that the acquisition would result in the elimination of Spirit Airlines and its more affordable base fares, thus reducing options for budget-conscious travelers. The government initiated legal action to block this merger back in March.

JetBlue’s counterargument is grounded in the need for expansion and enhanced competitiveness against larger rival airlines. They assert that acquiring Spirit is essential for their growth strategy.

Notably, this trial is being presided over by U.S. District Judge William Young, and there is no jury involved. A verdict in this case is not expected to be issued on Tuesday.

This legal battle is emblematic of the Biden administration’s broader efforts to combat consolidation within the airline industry. Earlier this year, the Justice Department successfully won an antitrust lawsuit, leading to the dissolution of a partnership between JetBlue and American Airlines in New York and Boston.

The potential outcome of this trial holds significant implications for the domain of ultra-low-cost airlines, which offer low base fares but often include additional fees. If JetBlue’s acquisition of Spirit proceeds, Frontier Airlines would become the largest discount carrier in the United States.

Currently, JetBlue ranks as the sixth-largest airline in terms of revenue. However, if the acquisition materializes, it would leapfrog Alaska Airlines, placing JetBlue in the fifth position.

It is worth noting that Alaska Airlines recently announced its own acquisition, a $1 billion agreement to purchase Hawaiian Airlines. Whether the Justice Department will challenge this deal remains uncertain.

Previous administrations permitted a series of mergers that led to significant industry consolidation, with American, Delta, United, and Southwest now controlling roughly 80% of the domestic air-travel market. While the Justice Department had previously taken legal action to secure concessions in some of these mergers, the JetBlue-Spirit case represents the first merger trial.

Some financial analysts on Wall Street have raised concerns about the price JetBlue is paying for Spirit, given Spirit’s challenges in recovering from the pandemic. However, JetBlue has not indicated any intention to renegotiate the deal. If the court rules in favor of JetBlue, the airline plans to nearly double its fleet, rebrand Spirit’s yellow planes, and enhance passenger comfort by removing some seats, aligning them with the JetBlue experience.

Frequently Asked Questions (FAQs) about Airline Merger Trial

What is the primary issue at the center of the trial between JetBlue and Spirit Airlines?

The central issue in the trial is whether JetBlue’s proposed $3.8 billion acquisition of Spirit Airlines, the largest low-fare carrier in the U.S., will be permitted to proceed.

What are the arguments put forth by the Justice Department against the merger?

The Justice Department argues that the merger would negatively impact consumers by eliminating Spirit Airlines, known for its budget-friendly fares. They assert that this reduction in options for budget-conscious travelers would harm consumers.

What is JetBlue’s rationale for wanting to acquire Spirit Airlines?

JetBlue contends that acquiring Spirit Airlines is essential for its growth and to enhance its competitiveness in the airline industry, particularly against larger carriers.

Is there a jury involved in this trial?

No, there is no jury involved in this trial. The case is being presided over by U.S. District Judge William Young.

What are the potential consequences if the merger is approved?

If the merger goes through, it could potentially reshape the landscape of ultra-low-cost airlines, with Frontier Airlines becoming the largest discount carrier in the U.S. JetBlue would also move up the ranks to become the fifth-largest airline in terms of revenue.

How does this trial fit into the broader context of airline industry consolidation?

This trial represents the Biden administration’s efforts to address consolidation within the airline industry. Earlier in the year, the Justice Department succeeded in breaking up a partnership between JetBlue and American Airlines.

What is the significance of this trial for the airline industry?

The outcome of this trial could have significant implications for the airline industry, affecting competition and the availability of budget-friendly travel options.

Are there any concerns about the price JetBlue is paying for Spirit Airlines?

Some Wall Street analysts have raised concerns about the acquisition price, given Spirit’s challenges in recovering from the pandemic. However, JetBlue has not indicated any intention to renegotiate the deal.

What are JetBlue’s plans if the court rules in their favor?

If the court rules in favor of JetBlue, the airline plans to nearly double its fleet, rebrand Spirit’s planes, and improve passenger comfort by removing some seats to align them with the JetBlue experience.

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11 comments

AviationGeek22 December 5, 2023 - 8:48 pm

No jury?! judgin trial like this. jestice dep, merger issue, w8 n see.

Reply
Reader101 December 5, 2023 - 8:57 pm

wow, big trial bout jetblue n spirit. just think, consolidaon, mergers, competicion, imoportant stuff!

Reply
AirlineInsider December 6, 2023 - 2:22 am

JetBlue wanna make Spirit planes fancy like JetBlue, dat’s cool. But DOJ gotta decide first!

Reply
FlyHighFlyLow December 6, 2023 - 2:26 am

JetBlue grow, rebrand planes. spirits 4 sum, eh?

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EconNerd123 December 6, 2023 - 2:53 am

govt always lookin out 4 consumrs. jetblue say need spirit 2 comptr.

Reply
StockAnalyst99 December 6, 2023 - 3:33 am

pay too much 4 spirit? not good if high $$$. but jetblue no change plans.

Reply
AviationEnthusiast23 December 6, 2023 - 7:38 am

this is a big fight btw jetblue & doj, jetblue want spirit but doj say no, might mess up cheap flights!

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FinanceGuru December 6, 2023 - 9:21 am

Analysts say JetBlue maybe payin 2 much for Spirit, but no hint dey gonna change deal. Big bet!

Reply
Traveler1234 December 6, 2023 - 12:45 pm

Wow, if JetBlue gets Spirit, Frontier gonna b big in cheap flights, hope prices stay low tho!

Reply
TravelerXpress December 6, 2023 - 1:30 pm

spirit go poof, frontir top discounter. bigger jetblue!

Reply
EconExpert2022 December 6, 2023 - 4:09 pm

JetBlue needs Spirit for grow, DOJ worry ’bout prices, wat hapns nex gonna be imp for airlines!

Reply

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