The U.S. government has initiated its antitrust case against JetBlue in federal court, aiming to prevent the airline from acquiring low-cost carrier Spirit Airlines for $4 billion. The Department of Justice argued in a Boston court that the merger would result in reduced seats and increased prices, with JetBlue’s internal analysis projecting a 30% fare hike once the deal is completed. This would cost passengers approximately $1 billion annually. President Joe Biden’s administration is pursuing this case as part of its broader effort to maintain competition and ensure affordable air travel for American consumers.
JetBlue’s attorney countered by stating that the case was a misguided challenge to a merger between the sixth and seventh largest airlines in the country, which collectively hold less than 8% of the domestic market. In contrast, United, American, Delta, and Southwest Airlines control 80% of the market. The attorney argued that the government’s attempts to impede JetBlue’s growth as a competitor to these four dominant players would only perpetuate a market that is unfavorable for competition and consumers.
Interestingly, the trial commenced on the same day JetBlue reported lower-than-expected third-quarter results. The airline attributed this underperformance to air traffic control and weather-related delays during the summer travel season, while also anticipating a larger-than-anticipated loss in the fourth quarter. Consequently, JetBlue’s shares plummeted by as much as 18.5%, reaching a near 12-year low.
