Justice Department Sues to Block JetBlue’s Acquisition of Spirit

The Justice Department on Tuesday filed a lawsuit seeking to stop JetBlue Airways from buying Spirit Airlines, arguing that the $3.8 billion deal would reduce competition in a highly concentrated industry.

In the suit, the Justice Department said that by absorbing Spirit, JetBlue would eliminate a disruptive force that has kept fares low across the country. The merger would also give JetBlue an outsized hold on dozens of routes, the department’s antitrust division said.

The lawsuit is the latest example of the department’s aggressive approach to enforcing antitrust law under President Biden, suing to prevent mergers and challenging practices it considers anti-competitive across a variety of industries. The suit will put JetBlue’s plans on hold for at least a few months and possibly much longer. The company said on Monday that it expected a lawsuit and planned to defend its deal in court.

If the companies prevail, the combination would be the first major U.S. airline merger in years. It would help JetBlue rapidly achieve a long-sought expansion, leapfrogging Alaska Airlines to become the nation’s fifth-largest carrier.

But even if the airline does acquire Spirit, JetBlue would still hold only about 10 percent of the U.S. air travel market. United Airlines, which is the fourth-largest carrier, has a 15 percent market share. American Airlines, Delta Air Lines and Southwest Airlines each have more than 17 percent of the business. A series of large deals over the last couple of decades has greatly increased the power of the big four airlines, which have acquired companies like AirTran, TWA, Northwest, Continental and US Airways.

JetBlue has argued that consumers stand to benefit from the acquisition. The company has a reputation of challenging much larger carriers from airports in New York and Boston. A larger JetBlue, the company contends, would be able to compete even more vigorously, forcing the four dominant carriers to lower fares on more routes.

But the Justice Department said that while JetBlue offers affordable ticket prices, Spirit offers even cheaper fares, making it a bigger threat to large airlines at the airports it serves. JetBlue has also said that it plans to remove seats from Spirit’s densely packed planes to match its own configuration, which antitrust officials said would make it difficult to keep costs and fares as low as Spirit has.

The two airlines have dozens of overlapping routes and JetBlue’s promise to give up Spirit’s holdings in New York, Boston and Fort Lauderdale, Fla., isn’t enough to address concerns about competition, the Justice Department said.

JetBlue, which had to outbid Frontier Airlines to secure a deal with Spirit, has said that it expects to close the acquisition in the first half of next year.