The U.S. Department of Justice filed a lawsuit to block JetBlue's $3.8 billion merger with Spirit Airlines on Tuesday.
The Biden administration's move to block the deal, which would create the nation's fifth-largest airline, had been expected in recent weeks.
After a lengthy battle with Frontier Airlines, JetBlue finally prevailed in its bid to takeover Spirit last summer. However, hurdles remained as the Justice Department had already sued to undo JetBlue's Northeast partnership with American Airlines in 2021.
"JetBlue's plan would eliminate the unique competition that Spirit provides-and about half of all ultra-low-cost airline seats in the industry-and leave tens of millions of travelers to face higher fares and fewer options," the Justice Department stated in its complaint, which was filed in a Massachusetts court on Tuesday.
New York, Massachusetts and Washington, D.C. have joined the suit.
"Spirit itself put it simply: 'A JetBlue acquisition of Spirit will have lasting negative impacts on consumers,'" the department added. "JetBlue competes hard against Spirit and views it as a serious competitive threat. But instead of continuing that competition, JetBlue now proposes an acquisition that Spirit describes as 'a high-cost, high-fare airline buying a low-cost, low-fare airline."
The suit comes just one day after JetBlue published a report highlighting all the ways a merger with Spirit would improve competition, benefit other ultra-low-cost carriers and result in lower fares for passengers.
"JetBlue's unique combination of low fares and great service is a competitive force that keeps the legacy carriers on their toes and results in lower fares. This is the 'JetBlue Effect,' an outcome specifically cited by the U.S. Department of Justice," the airline stated. "An economic analysis found that JetBlue is proven on average to be over 3x as effective at lowering legacy carrier nonstop fares than Spirit. With the scale unlocked by combining with Spirit, JetBlue will be able to bring down legacy carrier fares on more routes, benefitting more travelers than if JetBlue and Spirit continued as standalone airlines."
The two carriers responded to Tuesday's complaint, stating they "will continue to advance our plan to create a compelling national challenger to the Big Four airlines."
Spirit Airlines plane. (photo via Spirit Airlines Media)"Customers deserve a competitive airline marketplace and we will pursue this merger to ensure they get it, continuing to disrupt the legacy airlines with low fares and award-winning service that even the DOJ has applauded," JetBlue CEO Robin Hayes said.
"We believe the DOJ has got it wrong on the law here and misses the point that this merger will create a national low-fare, high-quality competitor to the Big Four carriers which - thanks to their own DOJ-approved mergers - control about 80 percent of the U.S. market. There is too much at stake for the DOJ to prevent us from bringing the JetBlue difference to more customers in more markets."
"We disagree with the DOJ's decision to seek to block the proposed merger, which will benefit consumers and employees," added Spirit CEO Ted Christie. "We will vigorously defend our position that a combined JetBlue and Spirit will be a game changer for customers nationwide, creating the most compelling national low-fare challenger to the dominant U.S. carriers. Together, we intend to democratize flying for travelers across the country - a goal we believe is worthy of the government's support."
The Biden administration has taken a clear stance against deals it considers to be anti-competitive and has sued to block other mergers of late.
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