By Adriano Espaillat
03 Sep 2023, 22:05 PM EDT
As the US air travel industry continues its post-pandemic recovery, the United States deserves strong competition in its airline industry, with our national airlines competing to offer innovative solutions that lower prices and improve customer experiences. Unfortunately, for the residents of my district and many others in the Northeast, New York City-based airline JetBlue—and its impending acquisition of Spirit Airlines—stand in the way.
The revelation last week that JetBlue plans to increase prices on Spirit Airlines routes by as much as 40% if its merger with Spirit goes through is regrettable; however, it is not unexpected. Rather, it’s just the latest chapter in JetBlue’s ongoing saga to undermine free markets at the expense of consumers, and it’s time Americans took notice.
Like other airlines, JetBlue suffered heavy losses during the COVID-19 pandemic. However, instead of working to recoup these losses by innovating and outperforming its competitors, JetBlue has spent the past several years trying to stifle competition from airlines altogether.
In 2020, JetBlue entered into its “Northeast Alliance” with another major national airline: an anti-competitive partnership that resulted in these two airlines booking passengers on each other’s flights, sharing airport gates, and splitting revenue across the New York and Boston markets. Recognizing this as a dangerous regional monopoly, the Justice Department filed suit in September 2021 to break up the Northeast Alliance. According to Justice Department estimates, JetBlue’s Northeast Alliance may have cost Northeast travelers approximately $700 million in higher airfare prices annually.
Fortunately, on May 19 a federal court struck down the Northeast Alliance as anticompetitive, holding that the Alliance allowed JetBlue and its alleged competitor to “operate as a single airline” in the Northeast.
In July 2022, while this initial Justice Department antitrust lawsuit was still pending, JetBlue finalized its ignominious hostile takeover of Spirit Airlines—a deal that was initially rejected by Spirit’s board of directors over antitrust concerns. Unsurprisingly, JetBlue’s actions resulted in the Justice Department filing a second antitrust lawsuit against JetBlue in March 2023 to block this merger.
JetBlue’s acquisition of Spirit Airlines would be disastrous for American travelers. According to an MIT study, the presence of a single “ultra-low-cost airline” on a US flight route reduces the average price of all other flights on that route by 21%. Spirit is by far the largest ultra-low-cost carrier in the United States, controlling roughly half of the ultra-low-cost market. The complete removal of Spirit from the airline industry would have devastating consequences for consumers, especially low-income travelers.
By contrast, JetBlue’s pricing puts it well outside the “ultra-low-cost” category, while Department of Transportation data also shows Spirit is the lowest-cost US airline on roughly twice the highest-cost US routes. popular compared to JetBlue. Given JetBlue’s stated desire to buy Spirit to “build a bigger JetBlue,” logic dictates that this merger will inevitably increase prices on Spirit’s current flight routes.
Yet despite the common sense logic, JetBlue has made a strong claim that its merger with Spirit would benefit consumers—which brings us to last week. According to court documents that were improperly redacted by JetBlue’s lawyers, JetBlue accidentally revealed to the world that—should it merge with Spirit—it plans to increase fares on Spirit’s current flight routes by at least 24%, with increases of up to 40% on some routes. While JetBlue claims these internal documents were “taken out of context,” the company’s history of self-serving and anti-competitive behavior proves otherwise.
In 2020, on the heels of receiving $935 million in COVID-19 bailout funds to help airline employees stay afloat during the pandemic, JetBlue went ahead and contravened the intent of Congress by cutting employee wages and benefits. employees. Furthermore, in 2022, while the Justice Department’s Northeast Alliance lawsuit against JetBlue was still pending, JetBlue brazenly announced that it would expand its Northeast Alliance to apply to even more flight routes in 2023—in open defiance of the Justice Department. .
Fortunately, this behavior would come back to haunt JetBlue, as in March 2023, the Justice Department’s lawsuit to block JetBlue’s merger with Spirit expressly referenced JetBlue’s Northeast Alliance as evidence that it could not be trusted. in which JetBlue behaved competitively. In response, JetBlue finally agreed to break up its Northeast Alliance last July, but it did so only to save its merger with Spirit.
JetBlue’s anti-competitive and price gouging practices have hurt Americans, especially in New York. JetBlue’s acquisition of Spirit would only make matters worse, by reducing flight routes and raising prices.
In fact, the proposed merger between JetBlue and Spirit appears to have only one beneficiary: JetBlue. As the nation prepares for the impending October 2023 trial in this merger case, you would do well to remember this.
Espaillat represents northern Manhattan and parts of the Bronx in the US House of Representatives.