Airlines, Biden administration to clash in case that would reshape industry

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A trial is set to begin in U.S. District Court in Boston focused on JetBlue Airways’ $6.8 billion bid for rival Spirit Airlines.

It would mark the first time regulators have gone to court to stop a merger between two U.S. carriers, coming as four carriers dominate the domestic market.American Airlines and US Airways

According to a Justice Department filing in the Northeast Alliance case, the four largest airlines had 55 percent of the domestic air travel market in 2000, while a dozen smaller carriers competed for the rest. Today, the top four U.S. airlines account for 80 percent of the market, with the number of smaller competitors dwindling.

“The proposed acquisition would eliminate Spirit, a disruptive and innovative competitor and reduce consumer choice in hundreds of markets that it serves today or would serve in the future,” the Justice Department argued in court filings, adding that JetBlue planning documents show a merger would result in fewer seats and higher prices in markets Spirit currently serves.A wave of airline mergers in the years after the Sept.

He said travelers might not realize they benefit from Spirit’s presence regardless of whether they fly the airline, because it forces competitors to lower prices. Henry Harteveldt, an aviation analyst and president of Atmosphere Research, said despite its size, Spirit has proved to be a formidable competitor to larger rivals because it has gone head-to-head with the major players. Unlike other ultra-low-cost carriers that focus on serving smaller airports, Spirit has muscled into major terminals like Chicago’s O’Hare International, Dallas-Fort Worth International and Houston’s Bush Intercontinental, forcing larger carriers to compete on prices.

 

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