The Biden administration’s antitrust enforcement has been characterized by high-profile losses. Unlike some other recent attempts, JetBlue’s merger with Spirit Airlines did succeed. Unfortunately, despite the Department of Justice’s (DOJ) intentions, it has led to fewer choices for consumers instead of more.
The DOJ’s challenge of the merger was upheld in court. The judge’s ruling cited that the merger would result in the loss of an airline that serves the low-cost airline market. However, in his ruling the judge noted that had the merger gone through it would have increased competition for the larger airlines.
Despite the DOJ’s arguments, the merger would not have left low-cost airline travelers with fewer options, as JetBlue is not only also a low-cost carrier, it is also one of the safest. While it would have meant one fewer airline choice, it would likely have kept the airlines’ routes running.
JetBlue has cut back on both the number of flights they offer and destinations they serve. Meanwhile Spirit furloughed 260 pilots and delayed airplane deliveries after the merger was blocked. Instead of protecting consumers, the ruling has resulted in fewer choices for American travelers looking for low-cost options.
The DOJ’s prevention of JetBlue’s merger with Spirit Airlines highlights the tradeoffs inherent in the process. While attempting to provide consumers with more airlines to choose from, the DOJ has reduced the actual choices travelers in many locations have.
JetBlue and Spirit were both already small players in the airline market, holding 5.2 percent and 5.1 percent of the domestic air travel market respectively. Even after the proposed merger, they would have surpassed only one airline in size, Alaska Airlines. The result would have been a low-cost carrier as the fifth largest airline behind Delta, American, Southwest, and United.
As things stand now, Spirit is still in dire economic straights with its stock price falling from nearly $40 per share in 2021 to under $5 in 2024. While many airline stocks are down, few have fallen as far. This will likely result in Spirit Airlines not remaining operational in the coming years. Instead either the previous offer from Frontier Airlines will proceed or Spirit Airline’s future looks bleak. If the attempt by Frontier to buy Spirit also gets blocked, there is a good chance Spirit Airlines soon no longer exist, eliminating many low-cost flight options for consumers.
The DOJ did not protect consumers with its actions in the airline industry. It is micromanaging which small carriers can and cannot combine, or in Spirit’s case, potentially even exist. There is no threat of monopoly power, and the merger would encourage competition and consumer choice.
This is not the first time the DOJ has intervened in JetBlue’s attempts to recover after the pandemic. It previously shutdown a partnership between JetBlue and American Airlines, claiming it was uncompetitive. Meanwhile JetBlue’s stock is down nearly two-thirds since 2021. Instead of increasing competition for airline travelers, the DOJ is setting up the small competitors just trying to hang on after the pandemic to fail. Airlines shutting down routes reduces consumer choice; it does not enhance them.
JetBlue and Spirit are appealing the decision, but in the meantime consumer choices are disappearing.
Blocking this merger demonstrates the precarious position the DOJ is in when judging what is best for consumer choice. Its current focus on preventing all consolidation ignores that competition is frequently enhanced when two small players combine to challenge the dominant business model due to economies of scale and other market factors. In this case it would have pushed a low-cost carrier into a position to compete with the largest airlines. It still can if JetBlue’s appeal is approved.
Justin Leventhal is a senior policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on Twitter (X) @ConsumerPal.
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