It came as no surprise when the antitrust arm of the U.S. Justice Department went to court to block the acquisition of Spirit airlines by Jet Blue.
Both carriers offer flights out of Philadelphia and Baltimore-Washington and both are incorporated in Delaware. Jet Blue is about twice as large as Spirit.
“As our complaint alleges, the merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers, with the greatest impact felt by those who rely on what are known as ultra-low-cost carriers in order to fly,” said Attorney General Merrick B. Garland. “Companies in every industry should understand by now that this Justice Department will not hesitate to enforce our antitrust laws and protect American consumers.”
One sticking point was an alliance between Jet Blue and the dominant carrier at Philadelphia International Airport and the nation’s largeset airline, American. The department has already sued to block the alliance that, according to critics, amounts to monopoly behavior. While both carriers claim the alliance will not lead to higher prices, it is doubtful that American would get into a price war with Jet Blue on competing routes, such as Philly to Boston.
Earlier, Frontier Airlines walked away from a Spirit merger, after Jet Blue offered a buyout price that was above its comfort level. Frontier also has jets on order and can expand without Spirit.
The pressure to merge exists among airlines that are not part of the Big Four – American, United, Delta, and Southwest. The quartet account for about three-quarters of all domestic passenger traffic.
While the Frontier, Spirit deal made the most sense (both charge low fares and then pile on charges for luggage, etc.), a merger with Jet Blue would attempt to combine two different business models. Jet Blue offers more amenities such as onboard entertainment and higher fares.
If the deal does goes through, it is likely Jet Blue would absorb Spirit and drop its ultra-low fare model that puts pressure on other airlines to hold down ticket prices. Jeet Blue would also end up with an airline that is the butt of jokes over its low-end image.
Closer to home, a merger between Jet Blue and Spirt might offer some opportunities for start-up carrier Avelo, which is now flying out of Wilmington Airport (ILG) Airlines typically cut flights on routes where they compete with one another, perhaps offering an opening for other players.
Feds target ‘junk fees’ for families sitting together
The U.S. Department of Transportation rolled out a new family seating dashboard that highlights airlines that guarantee fee-free family seating, and those that do not.
As recently as a month ago, no U.S. airlines guaranteed fee-free family seating. Now, American Airlines, Alaska Airlines, and Frontier Airlines indicated they will guarantee that parents can sit with their young children without paying extra.
The department has also begun work on rulemaking to ban airlines from charging families junk fees to sit together.
Southwest, which does not have assigned seating, boards families about mid-way through its process. Seating all members of the family may or may not be available, but no fees are charged.Familes can pay extra for early boarding with fees that can run a couple of hundred dollars on a longer flight.
Last summer, Transportation Secretary Pete Buttigieg asked airlines to do more for passengers who had a flight canceled or delayed because of the airline. He told the CEOs of the 10 largest U.S. airlines that the Department would publish a dashboard on amenities and services provided, such as rebooking, meals, or hotels in the event of a controllable delay or cancellation. None of the 10 largest U.S. airlines guaranteed meals or hotels when a delay or cancellation was within the airlines’ control, and only one offered free rebooking. Now, all 10 airlines guarantee meals and rebooking, and nine guarantee hotels when an airline issue causes a cancellation or dela.
Airlines have seen a strong recovery from Covid-19, especially with federal funds that kept carriers out of bankruptcy court. At the same time, airlines have struggled with labor shortages and other issues.
Southwest saw a meltdown of its system that sent the carrier’s earnings into the loss column.
