The strange move by JetBlue to bid for Spirit Airlines yesterday caught most by surprise, and for good reason: the merger makes little sense on so many levels. Importantly, JetBlue should get its own house in order before it even considers absorbing an airline with a totally different culture and customer service model.
Analysis: JetBlue Should Focus On Getting Its Own House In Order, Not Merging With Spirit Airlines
I have so many thoughts about the potential JetBlue – Spirit tie-up.
First, it could be that JetBlue is really not interested in Spirit Airlines and simply wants to drive up Frontier’s acquisition cost. This is a strategy that JetBlue exercised when Alaska Airlines acquired Virgin America.
But JetBlue’s detailed note to employees yesterday suggests the carrier is serious about acquiring Spirit Airlines, absorbing it into JetBlue, and creating a far larger carrier it says will better compete with legacy airlines. JetBlue seems to think that this represents the best way to get more pilots and airplanes.
While a laudable goal in theory, JetBlue’s house is not in order. Last weekend, it led U.S. airlines in cancelling flights and stranding passengers. It has announced that it is voluntarily scaling back it summer schedule for fear of staffing shortages. Over the preceding months we have seen tepid on-time performances and the sort of travel disruptions that demonstrate a core problem. That problem remains unresolved.
We really have no insight into route profitability for either Spirit or JetBlue. JetBlue’s emphasis on Florida points to a new, potentially more permanent shift to leisure-travel in wake of the pandemic, but fierce competition has kept fares in check (to the point that JetBlue will soon abandon many Florida routes).
Put aside the anti-trust concerns for just a moment (which may be insurmountable). Can we just consider practical concerns? Or logical concerns?
What does a boutique carrier that sells itself as customer-friendly, hip, cool, and premium want to do with a carrier that unabashedly places price over quality and has a business model that prides itself on squeezing ancillary revenue from passengers?
Common fleet type, you might say. Overlapping routes (making anti-trust scrutiny even more harsh). The ability to create a powerhouse carrier to better compete with legacies.
Sure, having all Airbus planes is a plus. But that doesn’t explain why Nordstrom wants to merge with Dollar Tree. There must be a way for JetBlue to acquire more airplanes and hire more pilots.
I love the Spirit Airlines business model…as long as the carrier is transparent about its fees. It represents a great choice for informed passengers, even when weighing the risks of its mixed record on operational reliability.
But oil and water don’t mix. The JetBlue style is not the Spirit style and from what I understand the Spirit model is working just fine. Listen to JetBlue and it truly sounds like it simply wants the Spirit Airlines aircraft and staff but don’t have much use for the airline itself.
That’s not good news for consumers, because while JetBlue does keep fares in check, Spirit Airlines does an even better job of this in markets in which it faces head-t0-head competition with legacy carriers.
A merged JetBlue-Spirit axis would lead to higher fares, not lower fares, if JetBlue is successful in transforming Spirit from a truly ultra-low-cost, no-frills carrier to the free wi-fi, free snacks, free drinks, extra legroom model of JetBlue. That is not good for consumers who want choice. Those retrofits will be expensive too.
Taking on a behemoth budget carrier with a vastly different culture seems to me like a sure way to destroy both carriers. But at the very least, JetBlue better gets its own house in order before taking on even more. It starts with that.
I tend to think this deal is dead on arrival for exactly the reason Frontier does:
“In particular, the significant East Coast overlap between JetBlue and Spirit would reduce competition and limit options for consumers. It is surprising that JetBlue would consider such a merger at this time given that the Department of Justice is currently suing to block their pending alliance with American Airlines.”
But even putting that aside, JetBlue really needs to get its house in order before it considers such a huge merger with a vastly different carrier.
If you can’t do the little things right, you will never do the big things right…
You give JetBlue too much credit – or primarily fly on their Mint routes. I like Jetblue but the experience really isn’t overly premium on most routes. Think they have same problem as Virgin and Alaska. Sure, it’s better than legacies in economy and Spirit but for most people it is still an economy seat on a flight of 3 hours or less. How much of a premium can you really charge? Answer: not much. So seat pitch has come down. Unbundled fare structures added. baggage fees increased. There are no lounges for jetblue and no hope of first class on most flights. The Mint service is more of an outlier in the Jetblue business model and limited to a few flights. Would be interesting to learn if they plan to expand that if merger happens.
Spirit could hand out free drinks tomorrow if they wanted to. Many planes already have wi-fi, they could make it free if they wanted. The only thing that’s really missing is the IFE, but they could put streaming IFE in probably overnight until planes were retrofitted. Mosaic members (and AA elites) would love scoring the Big Front Seat for free.
At the end of the day, B6 is really an economy only carrier, and this will do nothing to their Mint flights other than provide more feed, and eliminate a major competitor. I don’t think this is as crazy as everyone makes it out to be. NK acquiring B6 would be the real crazy story.
People on here seem to exaggerate JetBlue being “better” in economy. I fly JetBlue every now and then and don’t find the economy experience better than Delta, particularly Delta Comfort Plus. JetBlue is also noticeably cheaper than the majors on routes I fly.
dumb idea. the cultures would take a decade or more to meld, meanwhile the customers suffer.
you are right JB need to up it’s game if it plans on keeping the passengers it has, more like last weekend and passengers are going elsewhere.
Jetblue and Spirit has totally different corporate cultures. The merger does not make sense.
Frontier need raise cash fast to match Jetblue’s offer. I suggest United Airlines to approach Frontier and buy Frontier’s 3 pair beyond-the-parameter DCA slots. Spirit does not fly to DCA. DCA are more valuable to UA than Frontier-Spirit.
JetBlue could also be looking to become a ULCC. Ben Baldanza sits on the board at JetBlue. And, regardless of feelings one way or the other, Spirit is good at what it does. It’s ultra low cost and they charge for everything. But they also offer more comfortable options like the Big Front Seat. JetBlue isn’t that dissimilar. They have a fleet that is mostly in an all economy configuration. But then they also have Mint. I kinda see these two getting together to be the mid-range option. They could call it Legacy Lite.
If JetBlue is successful in buying Spirit – I’d go out on a limb and predict United takes a really hard look at acquiring Frontier.
I’m not sure I see that happening. UA has a true hub-spoke route system, and Frontier really only competes with them at DEN. Given the direction Kirby is taking UA (ordering bigger planes, upgauging existing routes and retiring smaller planes), it’s hard to see where Frontier fits.
United Airlines is already the largest airlines operating in Denver. I doubt DOJ would allow UAL to acquire Frontier.
Instead UAL should look to acquiring Jetblue to increase Floride coverage and to obtain JFK slots.
Shirt term issues and long term issues are totally separate from each other. JetBlue’s operational issues have nothing to do with merging with Spirit. Every airline has operating hiccups. JetBlue’s are exacerbated by operating in New York.
The more important issue is the one of overlap, especially in Florida. But it’s not like the combined carrier will completely eliminate all semblance of competition in the areas it serves. There are a couple of small airlines called Delta and American that vigorously compete with both Spirit and JetBlue in the areas most people are concerned about, There’s this tiny airport just south of Fort Lauderdale that has a”small” hub airline that can compete effectively against the combined JetBlue and Spirit. Not to mention another small airline that hubs in Atlanta that offers far more possible connecting itineraries than Spirit/JetBlue could ever hope to offer. And that same little Atlanta-based airline is building up its presence in Miami, and Tim Dunn seems to feel his favorite airline (and the only perfect airline on Earth) will overtake the incumbent carrier there when it gets liquidated. I’m exaggerating most of the stuff about Miami and the Atlanta-based airline a bit, but the fact that it will probably be a serious competitor to the other airlines in Miami is likely.
As for regulators, I see a lot of commentary that regulators are 100% guaranteed to shoot down and kill this proposal and the NEA. As the song from Gershwin’s Porgy and Bess observes, “It ain’t necessarily so.”
One of these days, I have to learn how to type. LOL!
While I ultimately think this is a ploy to delay/make acquiring Spirit more expensive for Frontier, the operational issues you cite as a reason the merger shouldn’t happen is precisely why JetBlue needs to acquire another airline if it’s going to be sustainable long-term.
The operation issues are due to the fact that JetBlue doesn’t have enough planes or pilots and, at least for the planes, it is too far back in line delivery wise to get new ones any time soon. The operational issues won’t get better until they get more planes and pilots and right now the only way to do that quickly would be to acquire them from another airline. While I agree that merging the two cultures would be radically difficult, I could see JetBlue simply acquiring Spirit for its fleet, routes (some of which would be complementary to its own route network) and labor force. Essentially ditch anything Spirit and turn it into JetBlue. It would be similar to what Alaska did to Virgin America, where there’s practically no trace of the latter left, as opposed to say AA/US where you can still often identify ex-US planes and crew v. ex-AA.
as A former JetBlue employee it’s more than just getting their house in order they treat their employees like crap working them overtime constantly and have consistently said they don’t have the budget to pay them more or give them profit-sharing or pay increases and then have them do this is pretty much a slap in the face to other employees Frontline
JetBlue is a low quality airline and the flight attendant they are no professional