Justice Department sues to stop JetBlue-Spirit deal. What’s it mean for Boise travelers?

The Biden administration sued on Tuesday to block JetBlue Airways’ $3.8 billion purchase of Spirit Airlines, saying the deal would reduce competition and drive up airfares for consumers.

The Justice Department said the tie-up would especially hurt cost-conscious travelers who depend on Spirit to find cheaper options than they can find on JetBlue and other airlines.

Attorney General Merrick Garland said at a press conference that Spirit’s internal documents show that when it enters a market, fares fall by 17%, while JetBlue’s documents show that when Spirit stops flying a route, fares go up by 30%.

“The merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers, with the greatest impact felt by those who rely on what are known as ultra-low-cost carriers in order to fly,” Garland said.

Spirit, based in South Florida, launched service at the Boise Airport last summer with a nonstop daily flight to and from Las Vegas. The addition gave the local air hub its eighth commercial airline, with four of those carriers offering the route.

Spirit’s arrival came on the heels of JetBlue exiting the Boise market last spring. The New York-headquartered airline offered just a single season of summer service between Boise and New York City’s John F. Kennedy International Airport, but discontinued the nonstop route — at that time the airport’s longest and farthest-east flight.

“There is a lack of clarity as we go through this process,” John Kirby, Spirit’s vice president of network planning, told the Idaho Statesman in August, citing the lengthy timeline before the possible merger. “So until then, we’re an independent airline making our own business decisions. If we’re successful and grow here, it’ll be because Spirit wants to grow, not JetBlue.”

JetBlue and Spirit anticipated the government challenge for weeks. The government had previously requested additional documents and depositions about JetBlue’s proposal to buy Spirit, the nation’s biggest budget airline. Negotiations over a possible settlement failed.

“We disagree with the DOJ’s decision to seek to block the proposed merger, which will benefit consumers and employees,” Spirit CEO Ted Christie said in a statement. “Together, we intend to democratize flying for travelers across the country — a goal we believe is worthy of the government’s support.”

The Justice Department said in the lawsuit, filed in federal district court in Boston, that the deal would end direct competition between JetBlue and Spirit and eliminate Spirit, the nation’s biggest “ultra-low-cost carrier.”

“If the acquisition is approved, JetBlue plans to abandon Spirit’s business model, remove seats from Spirit’s planes, and charge Spirit’s customers higher prices,” the department lawyers wrote. “JetBlue’s plan would eliminate the unique competition that Spirit provides — and about half of all ultra-low-cost airline seats in the industry — and leave tens of millions of travelers to face higher fares and fewer options.”

As signals grew that the government would challenge the tie-up, JetBlue CEO Robin Hayes and other company executives launched a pre-emptive campaign to make their argument that the deal would help consumers by creating a stronger competitor to the four carriers that control about 80% of the domestic air-travel market.

Hayes said Tuesday that he was disappointed but not surprised at the lawsuit. “There is too much at stake for the DOJ to prevent us from bringing the JetBlue difference to more customers in more markets,” he said in a statement.

The Justice Department was under pressure from Democratic lawmakers and consumer advocates who have complained about a wave of earlier mergers that regulators approved, and which left fewer airlines controlling a greater share of the market. The administration’s concern about airline-industry consolidation was on display in 2021 when the Justice Department sued to kill a limited partnership between JetBlue and American Airlines in the Northeast.

JetBlue held on to hope that the administration would come around to its argument that the combination with Spirit would be far smaller than other deals and would help consumers by putting pressure on the bigger airlines. JetBlue and Spirit together would control a little over 9% of the domestic air-travel market, far smaller than American, Delta, United and Southwest.

JetBlue executives repeatedly said their deal was not like Pepsi buying Coca-Cola — a line that Hayes repeated Tuesday. They said the Justice Department created the environment of four airlines dominating the market, and JetBlue merely wanted a better chance at competing with the giants — all of whom grew through mergers and acquisitions between 2008 and 2013.

The Justice Department sued to block the last megadeal, American’s merger with US Airways, then reached a settlement that required the carriers to give up some gates and takeoff and landing slots at several major airports. Before that, the government allowed Delta to buy Northwest, United to merge with Continental, and it later let Southwest buy AirTran.

Last year, JetBlue won a bidding war over Spirit against Frontier Airlines. Frontier CEO Barry Biffle argued that regulators would block a JetBlue-Spirit deal but not a tie-up with Frontier, a fellow discount airline.