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The US Justice Department filed a civil antitrust to stop JetBlue Airways Corporation’s [JBLU:US] proposed USD3.8bn acquisition of its largest and fastest-growing ultra-low-cost rival, Spirit Airlines [SAVE:US], due to concerns that the deal would result in higher fares and reduced options for routes for consumers in the US, as reported by Reuters on March 8. Attorneys Generals of Massachusetts, New York, and Washington D.C. also joined the lawsuit. The complaint, filed in Boston federal court, alleges that the proposed acquisition would combine two especially close and fierce competitors and remove a particularly disruptive force that has kept fares low across the country.
The merger, if succeeded, will create the fifth-largest carrier in the US, with a market occupation of around 10%. Four biggest carriers controlled 80% of the US domestic market after a series of large acquisitions that culminated a decade ago. Diana Moss, the president of the American Antitrust Institute, stated that the lawsuit sent a strong signal to the airline industry that the government will block any further mergers or joint ventures to prevent further concentration in the industry. JetBlue, on the other hand, argued that it is committed to low fares as any other airline, and that the merger will enable it to better compete with the nation’s largest airlines. Additionally, JetBlue has agreed that the combined airline would add hundreds of new daily flights to Florida and create at least 1,000 jobs to address concerns over its takeover of Spirit.
Sources:
https://www.reuters.com/business/us-announce-antitrust-enforcement-action-tuesday-2023-03-07/
https://www.justice.gov/opa/pr/justice-department-sues-block-jetblue-s-proposed-acquisition-spirit
https://www.nytimes.com/2023/03/07/business/justice-department-jetblue-spirit-merger.html
