US seeks to block JetBlue, Spirit Airlines merger at trial

BOSTON, Oct 31 (Reuters) – The U.S. Department of Justice will go to trial on Tuesday asking a federal judge to block JetBlue Airways (JBLU.O)’s $3.8 billion acquisition of ultra-low-cost carrier Spirit Airlines.

The lawsuit in federal court in Boston stems from President Joe Biden’s administration’s broader push to maintain competition among the lowest-cost airlines to ensure air travel remains affordable for more U.S. consumers. This is part of our efforts.

The trial will last about three weeks without a jury and will be led by U.S. District Judge William Young. At a hearing in March, Young said he felt an “obligation” to try to govern by the end of the year.

The merger between JetBlue and Spirit, the nation’s sixth and seventh largest airlines, respectively, would be the first major U.S. airline merger since Alaska Airlines acquired Virgin America in 2016.

According to the Department of Justice, the sector is dominated by four U.S. airlines (United Airlines, American Airlines, Delta Air Lines, and Southwest Airlines), which control 80% of the domestic market through a series of past airline mergers. ing.

JetBlue touts the deal as pro-consumer, pandering to U.S. regulators by agreeing to sell Spirit gates and slots at some airports in New York City, Boston, Newark and Fort Lauderdale. It seeks to allay antitrust concerns.

But the Justice Department said those divestitures weren’t enough, arguing in a lawsuit filed in March that the combined airline would harm consumers by raising fares and reducing national route options.

The department is filing the lawsuit jointly with Democratic attorneys general from six states and the District of Columbia. They call Spirit a “disruptive and innovative airline” whose low-cost, no-frills model has forced price cuts across the industry.

The Justice Department argues that the merger will remove pressure on major airlines, including JetBlue, to lower fares in response to competition from Spirit, forcing consumers to pay more than $2 billion a year in fares.

“This transaction will allow Spirit to become a higher-cost airline with fewer seats, higher fares, and less likely to overturn the higher prices of other airlines,” the department said in a court filing ahead of the trial. It is promised that it will be replaced by

The airlines counter that allowing the deal to go forward will reinforce JetBlue’s own long-standing reputation as a market disruptor.

JetBlue will become the nation’s fifth-largest airline, but its lawyers say its domestic market share remains less than 10%.

JetBlue said in a statement: “Our partnership with Spirit will transform the industry by increasing competition and choice and creating a long-awaited domestic low-fare challenger to the national low-fare dominant carrier. It’s a great opportunity.”

The department’s lawsuit is part of a broader push by the Biden administration to aggressively increase antitrust enforcement, an effort that has had mixed results in the courts.

JetBlue was already the focus of one of the earlier lawsuits, with another Boston judge, Leo Sorokin, ruling in May that JetBlue and American Airlines’ partnership in the Northeast violated antitrust laws. The government sided with the government by recognizing that

JetBlue subsequently decided to terminate the partnership. American Airlines is appealing Sorokin’s decision.

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