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Jet Blue-Spirit Airline merger in jeopardy, Justice department sues

Picture: CNN

The proposed merger of JetBlue Airways Corp. and Spirit Airlines Inc. has been met with opposition from the Justice Department, which has filed a lawsuit to block the deal on the grounds that it would limit competition and result in higher fares for millions of travelers.

The merger would reduce capacity and eliminate the largest ultra-low-cost competitor, according to officials. The lawsuit was filed in Massachusetts federal court, with the states of New York, Massachusetts, and the District of Columbia joining the government.

JetBlue and Spirit have said they will contest the lawsuit, stating that the merger would increase competition among major airlines and benefit air travelers. The proposed $3.8 billion deal aims to create the fifth-largest airline in the US, with an estimated 9% market share. The Transportation Department has also expressed support for the lawsuit and will continue its own investigation.

JetBlue and Spirit have different approaches to the airline industry, with JetBlue providing a high-end experience that includes free in-flight internet, while Spirit is focused on offering low fares with fees for extras. The proposed merger aims to broaden JetBlue’s national presence, which is currently concentrated in the Northeast.

JetBlue has announced plans to repaint Spirit’s bright yellow planes and remove some seats from the more crowded cabins. However, the Justice Department has filed a lawsuit alleging that the merger would lead to higher fares, citing a statement by a JetBlue executive that the synergy of the deal would come from charging higher prices for fewer available seats. Nonetheless, both airlines have argued that the merger would benefit the domestic airline industry and support U.S. international aviation policy goals.

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