What does Trump's offer mean for JetBlue's Spirit deal? CHICAGO WASHINGTON Reuters - JetBlue Airways' decision to leave its alliance with American Airlines has improved its chances in the trial over a $3.8 billion deal to buy Spirit Airlines, but may not be enough to hand it a victory, antitrust experts said.
In its suit filed March aimed at stopping JetBlue's purchase of Spirit, the Justice Department of the United States DOJ cited as evidence JetBlue's alliance with American at airports in New York and Boston several times.
The DOJ said it was a de facto merger that JetBlue's proposed acquisition of Spirit, a Florida-based ultra-low cost carrier, would result in further industry concentration.
On Wednesday, JetBlue's CEO Robin Hayes, who chairs the company, said that ending the partnership with American has taken the DOJ's misplaced concerns off the table and would help when the Spirit case goes to trial in October.
Eleanor Fox, a professor of antitrust at the New York University School of Law, said JetBlue would have found it even harder to win the Spirit trial by being in alliance with American because it had made the carrier a bigger player in certain markets.
It improves the chances that JetBlue-Spirit will win the trial, Fox said.
Former Federal Trade Commission Chairman William Kovacic, a law professor at George Washington University, said the airline had to choose between the alliance and the Spirit merger because both could not survive regulatory scrutiny.
The alliance allowed JetBlue to access American's airport spaces and customers, enabling it to add new routes and operate more flights out of airports in New York and Boston.
JetBlue, based in New York, sees the Spirit deal as a means to expand its domestic presence amid ongoing labor and aircraft shortages. In 2016, it tried to buy Virgin America, but lost out to Alaska Air Group.
To address antitrust concerns, JetBlue last month agreed to divest all holdings of Spirit at New York's LaGuardia Airport to Frontier Group Holdings, if it succeeds in closing the deal.
James Speta, a law professor from Northwestern University, is unsure the dissolution of the Northeast Alliance and the planned divestiture will be enough for JetBlue to prevail in the DOJ lawsuit.
A JetBlue-Spirit combination will significantly change the U.S. landscape of low-cost airlines and lead to further consolidation, he said.
American, Delta, United and Southwest Airlines control almost 80% of the U.S. airline industry.
The DOJ said the acquisition would leave tens of millions of travelers to face higher fares and fewer options.
There is an argument to be made against the merger, he said, but added that there's still an argument to be made.