Where do Spirit and JetBlue go from here?
As most of you have no doubt read a judge last week blocked the JetBlue-Spirit merger from moving forward. The suit filed by the Department of Justice was on antitrust grounds.
From my vantage point, having seen the Obama Justice Department not oppose the Southwest-AirTran merger and then seeing air fares rise as a result (as well as competition in Atlanta and Orlando in particular be reduced) my view is the Biden DOJ was spot on in filing this lawsuit. Particularly for those of us in Florida, the loss of Spirit as a low fare option on many routes would have been detrimental to consumers.
However, the DOJ’s lawsuit was not popular in Florida, with business and political leaders opining the combined carrier which would have had potentially its largest hub in Fort Lauderdale (New York-JFK was the other candidate for the largest hub of the combined carrier) and could have created synergies that would have benefited Florida. I tended to agree with that view but could not reconcile myself to the reality that eliminating Spirit was an independent entity would no doubt lead to a severe increase in air fares across the country especially here in Florida.
Spirit is the nation’s largest Ultra low-cost carrier, and the only one of the five (Frontier, Avelo, Breeze and Allegiant also are ULCC’s) that generally operates daily or multiple daily flights on heavily traveled segments. The loss of Spirit would have meant a HUGE loss in ultra-low cost capacity ultimately making air travel more expensive and inaccessible for the masses. So despite the obvious local benefits of the merger, I opposed it.
So what happens now? It’s pretty clear to me JetBlue has no plan and will flail around for a while. The airline’s new CEO Joanna Geraghty inherits an airline that has been an operations nightmare and has been slipping in terms of market share in three of its four biggest stations (Boston, Fort Lauderdale and Orlando). JetBlue has also fared very poorly in its attempts to carve out competitive operations at Newark and Los Angeles. For all the glitz and glitter we see on the outside with what is an admired company, internally things have been a mess. I’m not sure where they go from here to be honest. But the reality is Wall Street which has long backed the airline did not like the merger proposal is probably relieved that the court blocked it. An airline with a premium reputation like JetBlue absorbing an ultra-low cost carrier like Spirit never made sense from an investors standpoint.
In terms of Spirit, finances have been tight and perhaps they cannot survive as an independent airline. It’s very possible Frontier comes back to the table and makes another merger proposal with Spirit. Both airlines fly an all Airbus fleet and are ULCC’s. But I do think Spirit still has some strengths. They’ve overtaken JetBlue as Fort Lauderdale’s number one carrier, are a strong number three in Miami, and strong number two in Orlando and Las Vegas.
In addition, I point to the operations at Atlanta and Dallas/Fort Worth, airports dominated by a single legacy airline hub, where Spirit has strategically flown the heaviest traveled routes sometimes with well-timed multiple daily flights. Network-wise and operationally Spirit’s structure still makes sense, so if no offer from Frontier comes, I still think they can go it alone and survive.
