Justice is suing to block JetBlue’s purchase of Spirit Airlines

New York (CNN) The US Department of Justice is suing to stop JetBlue’s proposed $3.8 billion deal Buy a Spirit Airlines discountthe first time in More than 20 years that the government sought to prevent the merger of a US airline.

The suit, which Attorney General Merrick Garland announced on Tuesday, comes as no surprise: The Biden administration has argued since taking office that more business competition is needed, especially in the United States. Airlines industriesto reduce costs to consumers. spirit (Memorizes)with l Low basic wage business model Customers who charge extra for everything, including carry-on baggage, are prompting the larger carriers to offer a percentage of their seat at the lowest possible rate.

Allowing the merger, Garland said, would greatly hurt consumers, particularly those who depend on the lower prices available on Spirit.

“If not banned, the merger of JetBlue and Spirit will lead to higher fares and fewer choices for tens of millions of travelers across the country. The Department of Justice is suing to prevent that from happening,” Garland said. “Companies in every industry must now understand that this Department of Justice will not hesitate to enforce antitrust laws and protect American consumers.”

But over the past 22 years, the Department of Justice has authorized a series of Five airline mergers Without a suit like the one announced on Tuesday. Those deals turned nine major US airlines into four – American Airlines (AAL)And Delta Airlines (DAL)And United Airlines (UAL) And Southwest Airlines (luv). Between them, airlines control about 80% of the country’s air traffic.

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Jet Blue (JBLU) He argues that the deal will create a new, stronger competitor to the Big Four airlines and will lower, not increase, prices. He argues that JetBlue and Spirit compete primarily with other carriers and not with each other, so the combination wouldn’t reduce competition significantly. It has offered to give up landing and take-off slots and gates at crowded airports to other lower fare airlines, in order to encourage continued competition.

“The combination of JetBlue and Spirit as well as the rapid growth of ultra-low-cost carriers will ensure increased competition and lower fares,” said a statement from JetBlue.

It has vowed to move forward with the merger effort and hopes to defeat the lawsuit in time to close its deal with Spirit by the end of the year. But she was fighting a separate suit From the Department of Justice challenging its alliance with American Airlines of nearly 18 months.

While Spirit now supports the deal, it previously opposed the JetBlue purchase. She had originally agreed to a Merger without another company is very low costFrontier Airlines, and argued that the deal with JetBlue faced too many regulatory challenges to be approved because it would raise fares.

She’s resigned herself to accepting a JetBlue deal only when it’s her own The shareholders rejected the merger with Frontier in favor of JetBlue’s most lucrative bid.

Garland cited a statement from Spirit’s board of directors when he was still fighting the JetBlue deal, when he said, “The court would be very concerned that the JetBlue-Spirit combination would result in a higher cost, higher airfare that would eliminate lower cost, lower airfare.” , eliminating about half of the lowest-cost capacity in the United States.”

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“We agree,” Garland added after reading that quote.

But now the decision on the deal is not in the hands of the Department of Justice or two other federal agencies whose approval is also required before the proposed JetBlue-Spirit merger can be finalized — the Department of Transportation and the Federal Communications Commission. Instead, the decision will be left to the federal courts that will hear the case.

The Justice Department brought this case in federal court in Boston. He had not yet been assigned to a specific judge as of Tuesday afternoon.

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