Puerto Rico market cited in DOJ suit to block JetBlue-Spirit merger
The United States Department of Justice (DOJ) has filed a civil antitrust lawsuit to halt the proposed merger of JetBlue and Spirit airlines. The DOJ claims that the $3.8 billion acquisition violates Section 7 of the Clayton Act and would limit choices and drive up ticket prices for passengers, and specifically mentioned potential conflicts in certain markets including Puerto Rico.
In a statement, U.S. Attorney General Merrick Garland said that for service between Boston and San Juan, the two airlines account for nearly 90% of the passengers flying the route. And on certain routes, JetBlue and Spirit are the only carriers providing nonstop service, such as between Miami/Fort Lauderdale and Aguadilla, Puerto Rico.
“Spirit first landed on the island in 2001 with service to San Juan (SJU) and has grown its Puerto Rican route map to include Aguadilla (BQN) and Ponce (PSE). The airline will offer 21 peak-day departures in San Juan by June 2023, making it the second-largest carrier by destinations, seats and available seat miles (ASM),” reads Spirit’s latest Puerto Rico-related news release.
Meanwhile, JetBlue had some two dozen flights arriving in Puerto Rico on Tuesday alone.
The DOJ alleges that the merger would be particularly harmful to travelers who rely on ultra-low-cost carriers such as “working- and middle-class Americans. By acquiring Spirit, JetBlue would eliminate the largest ultra-low-cost carrier in the United States.”
“Eliminating competition between JetBlue and Spirit on these and other routes would eliminate Spirit’s unique and disruptive role in the industry and significantly harm consumers,” the attorney general said. “Spirit’s own internal documents estimate that when it starts flying a route, average fares fall by 17%. And an internal JetBlue document estimates that when Spirit stops flying a route, average fares go up by 30%.”
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, according to the DOJ. The proposed merger occurs against the backdrop of an already concentrated airline industry, with four airlines – American, Delta, United and Southwest — controlling close to 80% of the market. The DOJ alleges that JetBlue’s proposed takeover will only exacerbate concentration and further stifle competition in the industry.
The lawsuit was joined by the Commonwealth of Massachusetts, the State of New York and the District of Columbia.
According to the Associated Press, the administration of President Joe Biden’s concern about airline consolidation surfaced in 2021 when the DOJ sued to kill a limited partnership between JetBlue and American Airlines in the Northeast. The department was under pressure from Democratic lawmakers and consumer advocates who complained about a wave of earlier mergers that left fewer airlines holding a greater share of the market. Nevertheless, JetBlue and Spirit have vowed to continue fighting to salvage their agreement.
Leave a Comment