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The current trial could potentially revolutionize ultralow-cost airlines, reshaping the dynamic of the current market. Although they offer discounted fares, the ultra-low-cost carriers have additional fees tacked on top that aren’t present with traditional carriers in order to compete with the larger airlines.
Travelers wait to examine baggage into their Spirit Airlines at George Bush Intercontinental Airport, Tuesday, Nov. 21, 2023, in Houston. Jason Fochtman/Houston Chronicle through AP
By MICHAEL CASEY, Associated Press
December 5, 2023|12:30 PM
BOSTON (AP) — According to attorney Ryan Shores, the nation’s largest airliners are leveraging their size to establish control in a world post-pandemic, creating an urgency. He insists that it is essential for a federal judge to approve JetBlue’s proposition to acquire Spirit Airlines in order to create a significant competitor to the four airlines that monopolize the national air-travel market.
“This need is far more urgent today,” Shores stated during the closing arguments of a trial regarding the U.S. Justice Department’s lawsuit aimed at blocking JetBlue’s $3.8 billion purchase of Spirit, which is the largest low-fare provider in the country.
The federal government sued JetBlue back in March to halt the merger, implying that the deal would pose potential harm to customers as it would eliminate Spirit and its lower base fares, in turn offering fewer options to budget travelers.
At the trial, where U.S. District Judge William Young presides, the judge asked questions on how long it would take for customers to notice the benefits promised by the merger, such as increased competition against the larger airlines.
This trial serves as yet another challenge to the Biden administration’s efforts to tackle the issue of consolidation in the airline market. The Justice Department recently triumphed in an antitrust case against American Airlines and JetBlue, breaking up their partnership in New York and Boston. This verdict might bring about a change in the industry by creating potential opportunities for so-called ultra-low-cost carriers. These airlines deliver low fares but have additional fees, placing them at a competitive advantage with the traditional carriers that control the U.S. air-travel market. The acquisition of Spirit by JetBlue could potentially make Frontier Airlines the leading discount provider in the country.
Ultimately, JetBlue could jump from being the country’s 6th largest carrier to 5th place, edging out Alaska Airlines if the acquisition of Spirit takes place.
On a separate note, Alaska Airlines recently announced its acquisition of Hawaiian Airlines for $1 billion. The Justice Department has not yet disclosed intentions to challenge this deal.
Previous administrations allowed the airline market to undergo a series of mergers, culminating in a situation where the market is dominated by four airlines. A decision from the U.S. District Judge William Young is yet to be reached and is not expected to be announced on the same day of closing arguments.
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