In 2022, when it was announced that Spirit Airlines would be acquired by JetBlue for $3.8 billion, there were a lot of people cheering — not necessarily because they love corporate mergers and acquisitions, but because they hated Spirit Airlines and wanted it to go away forever.
Today, however, JetBlue officially announced that the merger deal was off, in accordance with the decision of a Boston federal court this past January, which found that the merger of the two airlines would drive up prices for consumers. This, as misery-inducing as a flight on Spirit Airlines may be, is what we should really be cheering for — because it means that antitrust regulations are back.
This would be the first time that federal regulators have ever used antitrust laws to win a lawsuit to block an airline merger and the first time they have tried since 2001, when United backed out of its bid to acquire US Airways after it was challenged by the US Justice Department.
Via CNN:
JetBlue agreed to pay Spirit $69 million as part of its decision to end the deal, JetBlue said.
While the companies had appealed the judge’s ruling blocking the deal, JetBlue and Spirit both issued statements saying it had become clear they wouldn’t be able to overcome the legal obstacles to complete the merger.
“Given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently,” said JetBlue CEO Joanna Geraghty.
Spirit said it was always prepared to continue as an independent airline, given the regulatory challenges the deal faced.
This may actually be a welcome out for JetBlue, as Spirit is no longer valued at the $3.8 billion they initially agreed to buy it for, but it really is good for us as well.
“Our win in court is a victory for U.S. travelers who deserve lower prices and better choices,” Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division said in a statement back in January after the lawsuit was won. “We fought this case to protect consumers who, as the court recognized, ‘otherwise would have no voice.’ I am incredibly proud of the Antitrust Division’s team and our state law enforcement partners’ tireless advocacy.”
Now, Spirit Airlines flights are notoriously miserable and full of surprise charges, which is how they make their low-cost flights happen. They charge for everything, including carry-on luggage (for which they have been sued) and water. Would I ever go on one again? I would not, as I am both too delicate and too tall for their planes (by which I mean I panic on planes and my legs just physically do not fit in their seats). However! There are lots of people who can tolerate that for the low cost, or who simply can’t afford the higher prices from other airlines whether they can tolerate it or not, and if Spirit merged with JetBlue, that low cost would almost definitely go up — and, outside of free cookies and drinks, the misery factor likely would not improve all that much.
Having options like Spirit and Frontier is necessary, otherwise there would be very little incentive for other airlines to keep their prices down or to offer amenities that the budget airlines do not. We don’t want to be in a situation in which every option is both shitty and expensive.
Since the Reagan era and its embrace of Chicago School economists and Robert Bork’s anti-antitrust foolishness, antitrust laws and regulations have not been widely enforced, which is why we are in a situation where only a few companies seem to own everything. This has been bad for pretty much everyone other than those at the top of those companies, as it allows these companies to keep wages low and prices high. Airlines, in particular, have become seriously consolidated over the years thanks to mergers like these.
The Biden administration has been pushing for greater enforcement antitrust regulations, which is necessary to undo so much of the damage done to our economy by these massive corporations. We’re not helpless, we’re not condemned to live this way forever, and we can actually do things to change it.
PREVIOUSLY:
