A JetBlue airliner takes off past Spirit Airlines planes parked at gates at Fort Lauderdale-Hollywood International Airport in Florida on Feb. 23, 2023.working to block the purchaseJetBlue sells itself as an upscale low-cost airline, with 34 inches of seat pitch and no-cost amenities for which other airlines charge a fee. Spirit is the ultimate low-cost carrier, offering low fares with a la carte add-ons that permit travelers to choose the amenities and services they want.
What is often lost in the discussions of airlines merging is the economy of scale gained with size. Airlines operate with significant fixed costs. Whether a 140-seat Boeing 737 departs with 80 passengers, 100 passengers or at full capacity, the fixed equipment, airport fees and labor costs are essentially the same, with the marginal cost of extra fuel to carry a few more passengers effectively noise on their balance sheets. This means that profits are earned on the margins.
The merger of airlines like JetBlue and Spirit would not affect the national air travel equilibrium. Given that American, United, Delta and Southwest hold about Though preserving competition is often what the Justice Department cites to justify not approving a merger, the real issue may be limiting the power exerted by airlines. In general, large airlines have more clout than small airlines. Restricting mergers indirectly maintains the status quo and makes it easier to control airlines. Indeed, if the Justice Department could impose greater regulation and break the Big Four into smaller entities, it likely would.