A US lawmaker has again called on the US Department of Transportation (DOT) to stop the proposed USD3.8 billion merger between JetBlue Airways (B6, New York JFK) and Spirit Airlines (NK, Fort Lauderdale International) arguing it is not in the public interest.
In a letter to Transportation Secretary Pete Buttigieg, Democrat Senator Elizabeth Warren urged the regulator to invoke a rarely used authority from the 1950s to do so.
Bloomberg pointed out that although the DOT is the primary regulator for the US airline industry, it generally defers to the DOJ to decide if airline mergers comply with US antitrust law. The DOJ must go to court to prove a merger would harm competition. The DOT, however, can just decide that the merger is not in the public interest, an authority it has had since the Federal Aviation Administration (FAA) was created in 1958.
"DOT has significant and historically underutilised authorities to protect competition in the domestic air travel market to ensure any route transfers are 'consistent with the public interest,' and I urge you to consider utilizing these authorities as you continue your commendable consumer-protection efforts," Warren wrote.
Along with fellow Democrat Senator Alex Padilla, Warren in July already wrote a letter to Buttigieg and General Counsel John Putnam, arguing the DOT could "stop anti-competitive airline mergers altogether" against a backdrop of skyrocketing airline fares and worsening cancellations and flight delays. "We urge the Department to strongly consider the impacts these transactions would have on the routes where these airlines operate. By using its statutory authority to block transfers that are inconsistent with the public interest and that would harm domestic competition, the Department could stop anti-competitive airline mergers altogether."
The senators pointed out that JetBlue is already the subject of a DOJ antitrust suit over its alliance with American Airlines (AA, Dallas/Fort Worth). "A merger with Spirit could allow it to raise fares in routes with limited low-cost carrier competition and would leave Frontier Airlines (F9, Denver International) as the only large ultra-low-cost carrier," they warned.
In July, Spirit Airlines and JetBlue Airways agreed to merge in a deal that will see the creation of the US's fifth largest airline with a combined USD11.9 billion in annual revenues, subject to regulatory approval. Spirit earlier terminated a similar merger agreement with Frontier Airlines. The two carriers had been involved in a protracted bidding war for Spirit Airlines.
Four airlines - American Airlines, Southwest Airlines, Delta Air Lines, and United Airlines - control about 80% of the US domestic market, cementing their dominance through numerous mergers, including Delta-Northwest Airlines in 2008, United-Continental Airlines in 2010, and American-US Airways in 2013. "This excessive consolidation has been a consistent driver of price hikes for consumers," the senators said.
JetBlue Airways and Spirit Airlines were not immediately available for comment.