New York (CNN) The U.S. Justice Department has filed a lawsuit to stop JetBlue’s proposed $3.8 billion deal to buy discount airline Spirit Airlines, the first time in more than 20 years the government has tried to block a merger of U.S. airlines.
The lawsuit, announced Tuesday by Attorney General Merrick Garland, comes as no surprise: The Biden administration has argued since taking office that there needs to be more competition between companies, especially in the airline industry, to lower costs for consumers. Spirit (TO RESCUE)with its low base fare business model that charges customers extra for everything, including carry-on luggage, it pushes larger airlines to offer a percentage of their seats at the lowest possible price.
Garland said allowing the merger would significantly harm consumers, especially those who rely on the low rates available on Spirit.
“If left unblocked, the merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers across the country. The Justice Department is suing to prevent that from happening,” Garland said. “Companies in every industry should understand by now that this Justice Department will not hesitate to enforce antitrust laws and protect American consumers.”
But over the past 22 years, the Justice Department has allowed a string of five airline mergers without a lawsuit as announced Tuesday. Those deals turned nine major US carriers into four: American Airlines, Delta Air Lines, United Airlines and Southwest Airlines. Together, the airlines control about 80% of the country’s air traffic.
JetBlue (BLUE) argues that the deal would create a new, stronger competitor to those four larger airlines and work to lower fares, not raise them. It has vowed to continue with its merger efforts and hopes to defeat the lawsuit in time to close the deal with Spirit before the end of the year. But it has been pursuing a separate Justice Department lawsuit for nearly 18 months challenging an alliance with American Airlines.
— This is an evolving story. It will be updated
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