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…