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U.S. Department of Justice to Block Jet Blue Spirit Merger, Sources
WASHINGTON — According to the Bloomberg news agency, the United States Justice Department and Department of Transportation will make a move today to thwart JetBlue Airways' $3.8 billion acquisition of Spirit Airlines. (www.airlinerwatch.com) More...
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Yeah...the advertised price of Spirit Airlines may be only $3.8 billion, but be careful, JetBlue management team. There will be a fee to bring your lawyers into the office, another to bring their laptop bags, a fee to sit at a desk, a fee to adjust your office chair, a fee for closing the blinds on the windows, and another for photocopying the closing documents...this is going to be a $5 billion acquisition before you are done. You're going to be like the poor folks who spot a Spirit ticket for the price of a Greyhound ticket and think they can afford to fly this time! And then show up at the airport and their whole family vacation budget is blown just getting on the plane. The DoJ is probably just saving you a lot of trouble.
When Spirit and Frontier were examining a merger, it made sense because the two share a similar philosophy for pricing. But when JetBlue got involved, I saw something much different. JetBlue saw the opportunity to pick up a bunch of A320 series aircraft by buying an airline for much less than the cost of the aircraft alone (190 A320s of various types at a bit over $100 per plane for about $20 billion maybe?). Factor in the time slots and available routes under consideration and the move meant abandoning Spirit's price scheme in favor of JetBlue's, but also instant expansion for JetBlue. It is a shrewd business decision. However, I think the qualms expressed by DOT and DOJ are probably also accurate -- it will mean fewer options for customers and higher prices. It is hard to say what the correct balance is, but really Congress needs to draw lines for the industry so that the actions by DOT and DOJ appear less subjective when they are undertaken.
Creating the fifth largest airline seems like a very low bar for invoking anti-trust. In my opinion, anti-trust should only be used to block mergers that create monopolies on a national or regional level. It should not be used to support the cheapest provider of any good or service, particularly one that delivers such poor quality to the US consumer.
Airline mergers have generally not been good for the consumer - well done!
So here's a great example of a man (or woman?) sticking his nose where he don't belong. Buttigouge don't even know how to call a cab much less how to run DOT and anytine E. Warren is involved, people should be wary.
Well, I'm sure the regular Jet Blue clientele can breathe a little easier.
