JetBlue Airways and Spirit Airlines, two major U.S. carriers, have recently urged a U.S. appeals court to overturn a judge's ruling that blocked their proposed $3.8 billion merger. The airlines, in a brief, argued that the judge wrongly barred their merger despite recognizing it would "improve competition, and thus reduce prices, for the vast majority of consumers".
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The airlines stated that the rationale driving the deal was that by acquiring Spirit, JetBlue would roughly double in size and become a viable challenger to the four carriers that currently dominate U.S. airline travel. However, U.S. District Judge William Young, who presided over a non-jury trial, held that the deal violated federal antitrust law. He concluded that the deal would harm consumers by eliminating no-frills Spirit's low fares and its ability to put pressure on other higher-priced airlines.
The appeal stems from an antitrust lawsuit by the Justice Department and the Democratic state attorneys general from six states and the District of Columbia. They sued to block the deal, arguing it would lead to fewer flights and higher prices for millions of Americans. In response to U.S. regulators' concerns about the deal, JetBlue had tried to address these by agreeing to divest gates and slots at key airports in New York City; Boston; Newark, New Jersey; and Fort Lauderdale, Florida. The acquisition, bringing together the nation's sixth- and seventh-largest airlines, would give the merged company control of 10.2% of a domestic market dominated by four larger airlines. JetBlue had argued the deal would allow it to better compete against them.
The Justice Department is slated to respond to the airlines' appeal on April 11. The court plans to hear arguments in June, ahead of the July 24 deadline the companies' merger agreement set out to close the deal. In conclusion, the ongoing legal battle between JetBlue, Spirit, and the U.S. Department of Justice highlights the complexities of airline mergers in the current market. The outcome of this case could have significant implications for the future of the U.S. airline industry.