Today, Dr. Diana Moss, Vice President and Director of Competition Policy at the Progressive Policy Institute (PPI), provided new analysis on the proposed merger of JetBlue and ultra-low-cost carrier (ULCC) Spirit. The merger raises novel issues for airline competition in the United States and is the first time the U.S. Department of Justice has sought to block an airline merger because it will substantially reduce competition under Section 7 of the Clayton Act.
The merger of U.S. airline carriers JetBlue and Spirit, if it succeeds, will be the seventh major U.S. airline merger in the last two decades. As of mid-2012, the four largest airlines controlled about 57% of the national market, increasing to 68% in mid-2022. This slow hemorrhage of domestic carriers has tightened the Big 4 airline oligopoly, with little meaningful entry of new carriers. Since the last major swath of mergers in the mid-2000s, the entry of new carriers has reverted to levels in the pre-deregulation era.
As with previous airline mergers, the prospect of reduced competition following a JetBlue-Spirit tie-up raises concerns about higher fares and lower quality. But it is also an important case of “first impression.” If the merger goes through, JetBlue will likely dismantle Spirit, cutting budget-conscious travelers’ national ULCC flying options in half. This is a far cry from European passenger airline markets that feature many more low-cost carriers.
“Consumer choice, an important dimension of competition, is highly visible in the airline sector. It is a practical application of the premise that a substantial loss of competition can hurt consumers by taking away their options. If the government prevails, JetBlue-Spirit could open up bandwidth for the idea that a loss of choice is as harmful to consumers as higher prices or lower quality,” said Diana Moss. “Taken together, these harmful effects make a powerful case for why denying the JetBlue-Spirit merger would maintain competition and protect consumers.”
Read PPI’s full analysis here.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
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Media Contact: Amelia Fox – afox@ppionline.org
