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Yesterday, news broke that the United States Department of Justice (DOJ) is suing to block JetBlue Airways' acquisition of Spirit Airlines. The DOJ filed a lawsuit in federal court alleging that the merger would violate antitrust laws and harm competition in the airline industry.

The DOJ's Reasoning

The proposed acquisition had been announced in November 2022, with JetBlue agreeing to purchase Spirit for $4.6 billion. However, it's faced a number of obstacles. If the deal had gone through, it would have created the sixth-largest airline in the United States, with a combined fleet of over 400 aircraft and a significant presence in popular tourist destinations such as Florida and the Caribbean.

"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."

However, the DOJ has concerns that the merger would create a monopoly or duopoly in several key markets, particularly with regard to low-cost flights between the Northeast and Florida. According to the lawsuit, the merger would eliminate competition between JetBlue and Spirit and result in higher prices and reduced service quality for consumers. 

“As our complaint alleges, 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,” said Attorney General Merrick B. Garland in a press release from the DOJ. “Companies in every industry should understand by now that this Justice Department will not hesitate to enforce our antitrust laws and protect American consumers.”

The DOJ's decision to sue JetBlue and Spirit is part of a broader effort to prevent further consolidation in the airline industry. Over the past decade, there has been a wave of mergers and acquisitions in the sector, with large carriers such as American, Delta, and United gobbling up smaller competitors.

“JetBlue’s proposed acquisition of Spirit eliminates a disruptive, low-cost option for millions of Americans. Whether they fly Spirit or not, travelers throughout the United States benefit from an independent Spirit because where Spirit competes, other airlines – including JetBlue – are forced to compete more vigorously by lowering fares, offering greater innovations, and delivering more consumer choice,” said Principal Deputy Assistant Attorney General Doha Mekki of the Justice Department's Antitrust Division. 

History & Precedence 

While some argue that consolidation has led to greater efficiency and cost savings for airlines, others worry that it has also reduced competition and harmed consumers. The DOJ has taken an increasingly active role in scrutinizing airline mergers in recent years, with mixed success.

In some cases, such as the proposed merger between American Airlines and US Airways in 2013, the DOJ was successful in blocking the deal. In other cases, such as the Delta-Northwest merger in 2008, the DOJ allowed the merger to proceed with certain conditions.

"If the merger is allowed to proceed, it could set a precedent for further consolidation in the airline industry and potentially lead to more mergers and acquisitions."

The DOJ's decision to sue JetBlue and Spirit indicates that the agency is taking a tough stance on airline consolidation, particularly when it comes to low-cost carriers. While the outcome of the lawsuit is uncertain, it is likely to have significant implications for the airline industry as a whole.

If the DOJ is successful in blocking the merger, it could send a signal to other airlines that they will face increased scrutiny when attempting to acquire competitors. It could also provide a boost to smaller carriers such as Southwest and Alaska Airlines, which are not currently seeking mergers but could benefit from a more level playing field.

On the other hand, if the merger is allowed to proceed, it could set a precedent for further consolidation in the airline industry and potentially lead to more mergers and acquisitions. It could also strengthen JetBlue's position against competitors such as Southwest and Delta, and allow the airline to expand its network and reach more destinations.

Regardless of the outcome, the lawsuit highlights the ongoing tension between the benefits of consolidation and the need for competition in the airline industry. It remains to be seen whether the DOJ's efforts to preserve competition will ultimately help or harm consumers, but one thing is clear: the battle for control of the skies is far from over.

* This article was created with the help of Kambr AI. Formatting and stylistic edits were made.