(CNN) — The US Justice Department is suing to stop JetBlue’s proposed $3.8 billion deal to buy discount carrier Spirit Airlines, the first time in more than 20 years that the government has sought to block a US airline merger.
The lawsuit, announced Tuesday by Attorney General Merrick Garland, is not a surprise: The Biden administration has argued since taking office there needs to be greater competition between businesses, especially in the airline industry, to lower costs for consumers. Spirit, with its low base fare business model that charges customers extra for everything, including carry-on bags, prompts larger carriers to offer a percentage of their seats the lowest possible price.
Garland said that allowing the merger would significantly harm consumers, particularly those who depend on the low fares available on Spirit.
“If not blocked, 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,” said Garland. “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 last 22 years, the Justice Department has allowed a series of five airline mergers without a suit like the one announced Tuesday. Those deals turned nine major US carriers into four — American Airlines, Delta Air Lines, United Airlines and Southwest Airlines. Between them, the airlines control about 80% of the nation’s air traffic.
JetBlue argues that the deal would create a new, stronger competitor to those four larger airlines and work to bring down fares, not increase them. It has vowed to press ahead with its merger efforts and hopes to defeat the lawsuit in time to still close its deal with Spirit by the end of the year. But it has been fighting a separate lawsuit from the Justice Department challenging an alliance it has with American Airlines for nearly 18 months.
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