Closing arguments concluded today in a trial that will determine whether JetBlue and Spirit Airlines will merge. Although U.S. District Judge William Young carefully guarded his words, his statements suggest a compromise of more slot divesture could lead to approval of the merger.
Will Judge Approve JetBlue – Spirit Merger With More Concessions?
After four weeks of trial, opposing sides made their closing arguments today in a lawsuit that pits the US Department of Justice (DOJ) against JetBlue and Spirit Airlines, which are seeking to merge.
The arguments were familiar:
- US DOJ: The merger would harm consumers by eliminating Spirit Airlines, a carrier that forces other carriers to lower their prices when competing the same market
- “The fact is ULCCs as a flock are too small to make up for the loss of Spirit, which is 50 percent bigger than Frontier Airlines”
- JetBlue: A combination of the two carriers would benefit travelers by creating a formidable challenger to the four carriers (American, Delta, Southwest, United) that currently dominate the domestic market
- “JetBlue has been a 20-year maverick in this industry and is going to continue to be a disruptor going forward. The whole premise of this merger is that we want to go out and compete broadly.”
The decision now rets in the hands of Judge Young, an appointee of Ronald Reagan, the first time an airline has challenged a US government decision to block a merger.
How will he rule? Judge Young gave us some clues today:
- He told the DOJ attorney, “We’re not going to get anywhere if you win, the merger isn’t approved and Spirit goes belly up.”
- But he told JetBlue’s attorneys that fares would inevitably rise without Spirit Airlines presence in the market to “undercut everyone else.”
- Even so, he told the DOJ that he had “trouble” with the petition for a permeant injunction against a merger in a “dynamic industry facing unique opportunities and challenges in the post-COVID environment.”
- He also asked the DOJ it was possible to say that “with some more divestitures it might work.”
- DOJ attorneys responded that “there does not seem to be a remedy other than a full-stop injunction that would restore competition.”
Even though he cautioned the courtroom not to read into his own statements concerning how he would rule, we cannot help but to do so and it seems to me that Judge Young may be prepared to allow the merger to proceed if JetBlue and Spirt are willing to divest more slots.
Already, JetBlue has agreed to sell gates and/or slots in:
- Boston (BOS)
- Fort Lauderdale (FLL)
- New York (LGA and JFK)
- Newark (EWR)
CONCLUSION
The trial is over between JetBlue and the Department of Justice, with Judge Young now the sole decisionmaker as to whether this merger can proceed. If I was a betting man, I would say that this merger will be allowed to proceed with more slot concessions, but we may not know for several days or even weeks.
image: Civil Jury Project
He did not hint …he made VERY clear at the start not to take any light to the questions he asked.
“Pay no attention to the man behind the curtain.”
Give me a break. You think it is impossible to draw inferences based upon questioning? Thomas and Alito give the same disclaimer…
It’s disheartening to see the sentiment shift about jetBlue over the years. The potential compromise in the JetBlue-Spirit deal seems to spark mixed reactions. Let’s hope for a resolution that not only addresses business needs but also preserves the positive customer-focused image that jetBlue once held.
Judge: Do not take cany of the questions I ask into consideration as to how I will rule
Media: No problem….just kidding
I hope this is approved. Simply do not understand DOJ- they think they’re serving the consumer but doing the exact opposite IMO.
I would happily fly the merger but would never fly on Spirit as it is.
I wonder if the Alaska Hawaiian merger had any bearing on his closing comments.
He knows that the DOJ will be back in court concerning the proposed west coast merger.
A change in administrations would be in Seattle’s favor.
Yes, Jetblue Struggles, No Jetblue struggles.
Yes, Spirit lives, No, Spirit struggles.
Frankly, i think they should remain separate in the interest of consumers. But i agree, the Merger w/conditions will be approved, and that Jetblue will make hash of it.
United is not happy at you excluding EWR from the New York parentheses
Sorry if I’m missing something obvious here, but . . . When you say the merger may be approved with more slot concessions/divestitures, is it implied that there would be restrictions as to who would be allowed to end up with what JetBlue is forced to give away? If JetBlue slots were to wind up in the hands of American, Delta, or United, how would that maintain or increase competiton?
It’s a good point and is indeed a point of contention, especially at EWR where UA dominates but wants even more.
It will be fascinating to see the final decision. I think given this deal has a lot of shareholders in the lurch the timeline won’t be drawn out.
As you and I spoke at IAH… I don’t know if there is really much else worth anything to divest other than what has been offered or mentioned. And at that, FLL gates there isn’t exactly already a waiting list and Southwest has shrunk down to fewer than 40 daily flights on average and moved its intl up the road to MCO, opening up common use FIS gates in Terminal 1. The other three airports in the northeast… I know plenty of airlines who want some of those assets… but probably not the ones that the judge has in mind. Does Allegiant even want any of that? Frontier is interested in LGA certainly. I’m not sure a Breeze or Avelo is particularly interested given the ongoing operating expenses that come with taking space at any of those places. But of these divestitures and anything else marginally worthwhile, what if no LCC wants them? Does DOJ shoot itself in the foot and make DL/AA/UA’s day?
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I was a fan of the jetBlue / American alliance – when that was cancelled, it significantly reduced the attractiveness of the AA product in the northeast… But jetBlue is a now a poorly run, crappy airline that is seeking to take over a complete dumpster fire of an airline. It does not matter to me if it is approved, I will still fly them less and less… They are no longer the ‘innovative, customer-focused’ airline they were 10+ years ago. Bean counters have been in charge too long…