NEWS
JetBlue Proposes Divesting Spirit Assets in Boston, Newark if Merger is Allowed to Move Forward
Courtesy of jetblue/Instagram
JetBlue on Monday announced it would exclude more Spirit Airlines gates from its proposed merger with the low-cost carrier in an effort to win regulatory approval.
The U.S. Department of Justice sued to block JetBlue’s proposed $3.8 billion acquisition of Spirit, arguing that it will stifle competition. Federal regulators said the elimination of Spirit, the country’s biggest discount airline, would lead to increased prices from carriers that no longer have to compete with it.
On Monday, JetBlue said it reached an agreement to transfer ownership of Spirit holdings at Boston Logan International Airport and Newark Liberty International Airport, including gates and takeoff and landing authorizations, to Allegiant Air.
JetBlue said it will also turn over up to five gates and related ground facilities at Fort Lauderdale-Hollywood International Airport to the Broward County Aviation Departmen to promote ultra-low-cost carrier growth.
The move follows JetBlue’s June 1 announcement that it would divest all of Spirit’s holdings at New York’s LaGuardia Airport to Frontier Airlines.
All the divestiture proposals are subject to approval by the Federal Aviation Administration, the U.S. Department of Transportation, and local airport authorities.
“Merging with Spirit will allow us to bring our signature service and low fares to even more people and places across the country and beyond. Our divestiture commitment, while not needed to ensure the continued growth of the vibrant ultra-low-cost carrier segment, is aimed at removing any doubt of our commitment to promoting competition,” JetBlue CEO Robin Hayes said in a statement.
“JetBlue’s CEO’s statement that its [divestiture] of certain Spirit gates is aimed at ‘removing any doubt’ of JetBlue’s commitment to promoting competition is laughable, and she’d have been better off leaving out that soundbite,” said attorney and law lecturer Danny Karon, who is not involved in the case.
“If consolidation among the major air carriers proved anything, it proved their ability to put prices through the ceiling. JetBlue’s excuse that merging promotes competition is antithetical to antitrust law and market economics,” Karon said.
“With DOJ coming off successfully blocking JetBlue’s partnership with American, I’m surprised JetBlue is stepping back into the ring. Because when DOJ tees off on you, like they’re teeing off on Google, you’re in for trouble,” Karon said. “As large and well-heeled as JetBlue might be, rarely is a company a match for the federal government.”
TMX contributed to this article.
