A lawyer from the Department of Justice in The United States on Tuesday urged a federal judge to block a planned takeover of JetBlue Airways for $3.8 billion from ultra-low-cost airline Spirit Airlines at the start of a closely watched antitrust trial.
The case is before the federal court of Boston and is part of a broader effort by the administration of President Joe Biden to preserve competition among lower-cost airlines, ensuring that air travel remains affordable for many American consumers.
Justice Department attorney Arianna Markel in His opening statement told US District Judge William Young that the deal would result in fewer flights. and higher seats and prices.
He said an internal analysis of JetBlue rates is expected to increase by 30% once Spirit, which competes with JetBlue on about 100 routes nationwide, is no longer a competitor. Passengers suffer an estimated $1 billion in net damages each year, he said.
“JetBlue relies on the fact that it will eliminate Spirit and the competition that Spirit offers will allow JetBlue to raise fares,” Markel said. “This is real harm to real people.”
JetBlue attorney Ryan Shores responded that the case was “challenging”wrong” in a merger between the sixth and seventh largest airlines in the United States, which together control less than 8% of the domestic market dominated by four major airlines.
Those four US airlines – United Airlines, American Airlines, Delta Air Lines, and Southwest Airlines – They dominate 80% of the national market after a series of airline mergers “blessed” by the federal government. Shores said.
Shores, however, assured that the government mistakenly tried to prevent JetBlue from becoming a major challenger for four airlines and disrupting a market that has become “bad for competition and bad for consumers.” “In this case, the government is missing the forest for the trees,” Shores said.
The trial began the same day JetBlue posted lower-than-expected third-quarter results, which deal with air traffic control and weather delays during the summer travel season, and projected a larger-than-expected loss in the fourth quarter. Its shares fell 6.7% to a near 12-year low in morning trading.
JetBlue called the deal consumer-friendly. and sought to ease antitrust concerns from US regulators by agreeing to sell Spirit gates and slots at some airports in New York City, Boston, Newark, and Fort Lauderdale.
but The Justice Department says the divestments aren’t enough and in a lawsuit filed in March argued that the combined airline would harm consumers by raising fares and reducing options on routes across the country.
The department is suing along with Democratic attorneys general in six states and the District of Columbia. They call the Spirit a “disruptive and innovative airline” whose low cost and simple model forced price reductions across the industry.
The department’s case is part of a broader push to Biden to aggressively improve antitrust enforcement initiative with mixed results in the courts.
JetBlue has been the focus of one of his previous cases, and in May another Boston judge, Leo Sorokin, sided with the government in determining that the JetBlue partnership in the northeastern United States with American Airlines violated antitrust laws. JetBlue subsequently decided to end the alliance. American Airlines is appealing Sorokin’s decision.