DALLAS — The United States Department of Justice trial regarding the proposed US$3.8 billion acquisition of Spirit Airlines (NK) by JetBlue Airways (B6) has concluded with closing arguments from US District Judge William Young.
The judge has indicated that the deal could move forward if B6 agrees to divest additional assets. He acknowledged the unique challenges and opportunities in the post-COVID industry but also noted that fares would likely increase if the low-cost carriers merged.
JetBlue has already offered to divest gates and slots at various airports, but Young suggested that further divestitures might be necessary for the deal to be approved.
The judge has the authority to decide on divestitures, but B6’s lawyer emphasized the importance of narrow remedies. The New York-based airline believes that acquiring NK is crucial for it to be a viable competitor against the dominant airlines in the domestic market.
However, the timeline for consumers to experience the promised benefits, such as increased competition, could be two to three years after the market reaches a post-merger equilibrium, according to B6 lawyer Ryan Shores.
The Justice Department and several states sued to challenge the merger, arguing that it would harm competition. The trial began on October 31, and closing arguments were delivered on December 5.
According to a Cirium analysis of their route networks, the airlines fly around 650 city pairs, of which they overlap around 11%, primarily in Florida. Another source mentions that they compete head-to-head on 42 routes, which is roughly one in every six routes that the airlines operate.
If the B6-NK merger is approved, how much could fares potentially increase considering the competition from Southwest (WN), Frontier (F9), and potential new entrants in the market? Marginally, but only time will tell.
Featured image: N712JB JetBlue Airlines Airbus A320 FLL KFLL combo with Spirit Airlines N672NK A321. Photo: Alexander Schraff/Airways. Article source: ch-aviation.com