From Breakingviews - JetBlue’s Spirit sacrifice
as anticompetitive. JetBlue reckons it renders the U.S. lawsuit against its $3.8 billion merger plan moot, but the antitrust calculus isn’t quite so simple.
Under the Northeast Alliance, JetBlue teamed up with its larger rival to cross-sell tickets in important markets. Eschewing the benefits of what the government branded a “de facto merger” to win Spirit might make sense, however. According to the U.S. Department of Justice, Spirit grew capacity nearly 500% since 2010, far outstripping competitors. Given the scrutiny by trustbusters, any future consolidation beyond this deal is unlikely.
JetBlue’s concessions, which include selling Spirit’s operations at New York’s LaGuardia Airport, may not be enough, though. While the DOJ’sagainst the merger does lean on harms from the alliance, it also includes Spirit executives warning of risks even without it. JetBlue plans to remove up to 15% of seats from Spirit’s planes. Less capacity and higher costs suggest higher prices. It’s an easy argument for regulators to make when looking to ground JetBlue’s merger ambitions.
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