
On January 17, 2024, a judicial appointee of a President whose administration sharply curtailed antitrust enforcement* blocked a $3.8 billion attempt by JetBlue to merge its way into making the Big Four U.S. airlines (American, Delta, United, and Southwest) into the Big Five (with JetBlue as the fifth member).
After a 17-day bench trial, U.S. District Judge William G. Young in Boston held that JetBlue’s plan to gobble up the leading “ultra-low-cost carrier”–Spirit Airlines–“would substantially lessen competition in a relevant market.”
Judge Young’s 113-pages of Findings of Fact and Conclusions of Law detail the city-pair routes on which JetBlue and Spirit compete, discuss the experts’ forecasts of the merger’s likely effects, and sketches the legal framework for actions under Section 7 of the Clayton Act.
I recommend reading the whole thing, but I want to draw your attention especially to pages 105-06. There Judge Young explains why he rejects JetBlue’s claim that the merger would improve competition. JetBlue’s argument hinged on its plan to dump Spirit’s ultra-low-cost class of service in favor of JetBlue’s more expensive offering. Judge Young wouldn’t have it:
Throughout trial, the Government invoked the experience of the average Spirit consumer: a college student in Boston hoping to visit her parents in San Juan, Puerto Rico; a large Boston family planning a vacation to Miami that can only afford the trip at Spirit’s prices. It is this large category [of] consumers, those who must rely on Spirit, that this merger would harm; the Defendant Airlines, though exceedingly well represented, simply cannot demonstrate that these consumers would avoid harm.
In other words, because Spirit’s typical flier often can’t afford the higher fares JetBlue and Big Four airlines charge for more amenities, eliminating Spirit as an ultra-low-cost alternative by merging into JetBlue would deprive people with modest means of their most–and possibly only–affordable option.
Kudos to the Antitrust Division’s trial team for the win–and for putting ordinary people at the center of the case. That is a winning formula.
_____________
*Ronald Reagan nominated Judge Young on September 11, 1984.