The Department of Justice filed a lawsuit last year to block the
merger between JetBlue
Airways and Spirit Airlines. Earlier in January, a federal judge rendered
his decision and agreed with the DOJ that a combination of the two airlines
would be anti-competitive.
The DOJ believed it would be monopolistic and violate antitrust
law and argued it would drive fares up and eliminate a low-fare option for
consumers.
There would be a lack of competition, the DOJ said.
Now, there might not be any competition at all. Not if Spirit
Airlines goes away because the merger
was not completed.
Almost immediately after the verdict, financial analysts
covering the airlines thought Spirit might go bankrupt due to its mounds of
debt. Now, hindsight is 20/20, of course, but if the financial analyst could
see it so quickly, then so could the experts representing the government.
Sometimes, you just have to look at the larger picture.
Yes, a merger would have helped JetBlue be even more competitive
with the Big Four airlines. But the $3.8 billion merger would have helped
Spirit as well and maybe even saved it from bankruptcy, according to the
analysts.
Having fewer people on the unemployment line because of a merger
sounds infinitely more appealing than the alternative.
The DOJ set a precedent here. Now, you just have to wonder how
it affects future dealings, such as the upcoming potential merger between Hawaiian
Airlines and Alaska Airlines.
Not only has this JetBlue and Spirit Airlines merger been
blocked, but the DOJ successfully broke up the Northeast
Alliance between JetBlue and American Airlines last year.
Needless to say, it's a topsy-turvy time in the airline
industry.
And it’s only going to get crazier.
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