In a long-anticipated action, the Justice Department has sued to block JetBlue's $3.8 billion acquisition of Spirit Airlines.
The states of Massachusetts and New York as well as the District of Columbia have also joined in the suit, which was filed Tuesday in a Massachusetts federal court.
"The merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers, with greatest impact felt by those who rely on what are known as ultralow-cost carriers in order to fly," attorney general Merrick Garland said during a Tuesday press conference.
The lawsuit alleges that the merger would violate federal antitrust statutes in the consolidated U.S. airline market by eliminating competition between JetBlue and Spirit; reducing overall consumer choice; facilitating increased coordination between JetBlue and other airlines; and by causing higher tickets prices along with less passenger capacity.
A JetBlue-Spirit merger, the suit adds, would have an anticompetitive impact on more than 150 nonstop and connecting routes (including 40 nonstop routes that both carriers serve) affecting more than 30 million annual travelers.
There would be particularly large impacts in the Boston-Fort Lauderdale/Miami market, where JetBlue and Spirit account for nearly 50% of the flights, the suit says, and Boston-Puerto Rico, where they account for nearly 90% of service.
The suit also uses Spirit's own materials -- which the company's board put out last year while it was supporting a merger with Frontier over JetBlue -- to allege the harm that would be caused to consumers by the elimination of Spirit as an ultralow-cost carrier. Spirit accounts for approximately half of ultralow-cost carrier capacity in the U.S.
JetBlue and Spirit state their case
In a response to the lawsuit, JetBlue and Spirit restated their position that a larger JetBlue will benefit consumers by offering a stronger, national, low-fare competitor to American, Delta, Southwest and United, which together control approximately 80% of the domestic U.S. market.
"We will vigorously defend our position that a combined JetBlue and Spirit will be a game changer for customers nationwide, creating the most compelling national low-fare challenger to the dominant U.S. carriers," Spirit CEO Ted Christie said. "Together, we intend to democratize flying for travelers across the country -- a goal we believe is worthy of the government's support."
The carriers said JetBlue's basic economy offering, called Blue Basic, will be similar to Spirit's product. They also pointed to the recent support JetBlue won from the state of Florida after promising capacity build-ups in Fort Lauderdale and Orlando.
By 2027, JetBlue plans to fly to approximately 30 destinations from Fort Lauderdale that are not currently served by either JetBlue or Spirit. In addition, JetBlue has committed to increasing flight frequencies from Fort Lauderdale to approximately 30 markets that JetBlue and Spirit already serve.
A double whammy from the DOJ
The DOJ's antitrust action against JetBlue comes as the department awaits a decision in the case it tried last fall against JetBlue and American Airlines in an effort to break up their Northeast Alliance in the New York and Boston markets.
Approximately 75% of JetBlue's capacity is tied up in the alliance, the DOJ says.
Garland on Tuesday said a JetBlue-Spirit merger would violate antitrust laws even in the absence of the Northeast Alliance, but the existence of the JetBlue-American partnership exacerbates the potential harm.