A federal judge on Tuesday sided with the Biden administration to block JetBlue Airways from buying Spirit Airlines, saying the $3.8 billion deal would limit industry competition and put pressure on airfares.
The Justice Department sued to block the merger, saying that JetBlue’s buyout of Spirit, the nation’s largest low-cost carrier, would reduce the availability of budget-friendly ticket options for the nation’s most price-sensitive consumers.
JetBlue argued that the deal would actually benefit consumers by better positioning the airline to compete against bigger rivals that dominate the U.S. air-travel market.
In effect, the deal would have replaced low cost seats with pricier options, according to industry experts.
U.S. District Judge William Young, who presided over a non-jury trial last year, said in the ruling Tuesday that the government had proven “that the merger would substantially lessen competition in a relevant market.”
Shares of Spirit Airlines Inc. plunged more than 53% almost immediately.
“This is an enormous victory for travelers, workers, and local communities, and another huge win for antitrust enforcers at the DOJ,” said William J. McGee, Senior Fellow for Aviation and Travel at the American Economic Liberties Project, a non-profit advocating for corporate accountability legislation. “For the first time in 40+ years, a judge has flat out blocked an airline merger to protect us all from an even more consolidated industry, agreeing with the DOJ’s rigorous and well-argued case that the deal would hurt competition and raise prices across the board.”
“Airline executives and their Wall Street backers are now on notice,” McGee added. “The days of relentless consolidation are over,” he added.
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