ORLANDO, Fla. — Consumer advocates cheered Tuesday after receiving word that the Department of Justice filed a lawsuit to block the merger of JetBlue and Spirit Airlines, a move industry analysts had predicted since the merger was announced in July.
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Administration officials laid out their concerns, including that the merger would lead to fewer flight options for customers and higher ticket prices.
“Companies in every industry should understand by now that this Justice Department will not hesitate to enforce antitrust laws and protect American consumers,” Attorney General Merrick Garland said.
JetBlue has argued the merger will make the airline industry more competitive, introducing a 5th large airline to challenge Delta, United, Southwest and American, which combined control about 80% of the market. Executives said an additional large carrier would pressure the four to lower their rates.
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However, it’s the acquisition target – Spirit – that put its deal in the crosshairs. In markets like Orlando, America’s largest ultra-low-cost carrier often offers the lowest available fares to compliment its rock-bottom customer service rating.
For round-trip flights from Orlando on June 17, for example, Spirit undercut JetBlue’s prices on many routes the two compete in, with the exception of major northeast destinations JetBlue has long tried to dominate.
On a previous check back in July, for flights in September, Spirit offered lower fares on all routes.
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Advocates say consumers should expect ticket prices to rise upwards of 21% if Spirit disappeared, particularly in its home state of Florida where it has long sent many of its planes, and in Orlando, where it has the second biggest presence of all airlines.
“Fares are going to go up,” Bill McGee, an analyst with the anti-monopoly American Economic Liberties Project, said. “Anyone that says that these two carriers are going to merge with all the expenses of a merger… and they’ll offering the fares that spirit offers, that’s just not true.”
The merger’s cheerleaders, though, include Florida Attorney General Ashley Moody, who says the proposal is good for the Sunshine State thanks to an agreement she helped author.
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That agreement would mandate the newly combined company add 500 net jobs to the Orlando area within five years, and increase its ticket offerings to 150% above the current combined selection within seven years while protecting some routes.
The agreement did not mention prices.
“I am proud to take action to bring thousands of airline jobs to Florida communities, while also ensuring that Florida will see an unprecedented increase in affordable flights,” Moody said.
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McGee, a former airline worker who lost his job in a merger, predicted the deal would fall apart over time.
“It’s sort of fighting a two front war with the Department of Justice,” he said, referencing an ongoing lawsuit over a deal JetBlue struck with American Airlines, “I say it’s an uphill battle.”
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