Sources familiar with the matter say that the Justice Department is likely to file a case in federal court, claiming the proposed merger of JetBlue and Spirit Airlines violates antitrust laws. The lawsuit would argue that the elimination of Spirit Airlines would lead to higher fares and fewer choices for passengers.
The same sources who spoke to Bloomberg also revealed that the Department of Transportation is set to start a similar process to prevent the transfer of Spirit's airline operating certificate as it is not deemed in the public's best interest.
This action is relatively unheard of in contemporary times since the DOT has not used this authority to prevent AOC transfer among airlines since the industry's deregulation in 1978.
The Justice Department's lawsuit will reportedly be based on the perceived damage to consumers, such as limited options to book flights and an increase in ticket prices in case of a lack of an ultra-low-cost airline.
In July 2021, President Biden signed an executive order on competition, in which he specifically urged the Department of Transportation (DOT) and the Justice Department to collaborate on maintaining competition in air travel and allowing new participants to enter the market. The president's directive emphasized the importance of fair competition and advocated for strategies to encourage and safeguard it in the air transportation sector.
If approved, JetBlue's acquisition of Spirit Airlines would make it the fifth-largest carrier in the United States. Although the merged entity aims to attract customers from other airlines by offering lower fares and improved onboard amenities, this could enable JetBlue to exert significant influence on pricing in markets where it directly competes with larger rivals.
Although the Department of Transportation has not recently prevented a significant airline merger, Democrat Senator Elizabeth Warren wrote a letter to Transportation Secretary Pete Buttigieg in September 2022, calling for the agency to use its power to block the JetBlue-Spirit Airlines deal. The senator contended that the DOT has the authority to stop the acquisition and should do so because it is not in the best interest of the public.
