13 ms·

Judge blocks JetBlue from acquiring Spirit Airlines

149 points by i0exception 3y ago

jprd 3y ago
https://archive.is/MDYWF https://archive.is/MDYWF
vlovich123 3y ago
If Alaska acquires Hawaiian then this would have to be decided ultimately by SCOTUS right? I would think these two cases are too similar and there needs to be some fairness and consistency in the rulings.
- eganist 3y ago
  I'm probably oversimplifying, but Alaska + Hawaiian creates a larger regional competitor to e.g American, United, and Southwest on a more local scale where most of their routes are complimentary (the two weren't substantially competing; Alaska offers a handful of CONUS to Hawaii routes, whereas Hawaiian offers CONUS as well as international routes to/from Hawaii), whereas JetBlue acquiring Spirit consolidates nationwide low-cost carriers and reduces low-cost competition
  - vlovich123 3y ago
    It would probably still have an effect of raising prices for flights to/from Hawaii no?
    - eganist 3y ago
      Possibly, but it's not as abrupt and obvious as with JetBlue/Spirit, who both compete in the exact same market in modestly different ways. Alaska and Hawaiian have limited regional overlap with flights from certain west coast cities to certain islands, but beyond that, Alaska would be getting Hawaii's entire international route network and tying it in with their entire CONUS domestic route network. The more interesting transaction that arguably should've been stopped was Alaska purchasing Virgin America as they were both largely west coast airlines. But amazingly enough (as someone who held status on VA and later Alaska), my flights actually got cheaper after that merger, and I was consistently upgraded too. So if that merger hadn't happened, my experience would've been worse.
    - bobthepanda 3y ago
      That's easy enough to address with selling off Hawaii slots. To put this in perspective, 60 out of 566 JetBlue and Spirit routes overlap. Alaska and Hawaiian share 12 routes out of 336.
  - stevehawk 3y ago
    The problem is that Spirit is but going to survive 2024. Between their debt situation and a number of their A320 Neos about to be grounded thanks to a Pratt and Whitney eff-up, they won't be around long enough to keep anything competitive.
    - babyshake 3y ago
      If this is the case, then an acquisition to prevent a competitor from going bankrupt should generally not be anti-competitive? Since, they would no longer be your competition anyways?
      - mathgeek 3y ago
        It could be seen as pro consumer, but it also could be seen as anti competitive. Spirit going under would open up space for a new competitor to potentially move in. An analogy would be two competing gas stations at a very busy intersection with no plots nearby to build more stations. Just by existing they either drive each other down on price or collude on it. One going under means a new station could exist, but one buying the other guarantees prices do not go down.
    - kelnos 3y ago
      If that's the case, why does JetBlue want to acquire them now? Why not wait until they file for bankruptcy protection, and likely get a much better deal?
      - ceejayoz 3y ago
        They'll have to compete with others on all the individual bits that way. No one else wants all of Spirit, but given the opportunity to pick and choose, some aircraft and landing slots are likely to be competed for.
    - cjrp 3y ago
      And their share price has just tanked ~50%. Maybe that was the plan all along...
  - xvector 3y ago
    On a side note, I find it interesting that JetBlue is considered "low cost" but has the absolute best domestic business class by a long shot.
    - mmcconnell1618 3y ago
      I've always considered JetBlue to be a value leader vs. low cost leader. They have nicer seats, in seat entertainment in all classes and have a pricing/refund/exchange policy that is more customer friendly than competitors. Spirit is just going for low cost. Southwest is in between where they want low cost but you have to fight for a seat and might needs to have 2 or 3 stops to cross the country depending on where you start. I assume you're talking about JetBlue's Mint product which is all business class for some cross country flights and a few international. Again, I think they are trying to provide the best value for business class compared to the larger carriers.
      - trbleclef 3y ago
        They also have free wifi, which even Southwest still doesn't offer.
- maximilianroos 3y ago
  No — the Supreme Court will often review circuit splits in law, but these are splits in facts
jsyang00 3y ago
This is a bad ruling, Spirit is likely to go under without acquisition. Neither firm had particularly large share of market.
- apapapa 3y ago
  So its a good decision ... For the large airlines.
- eganist 3y ago
  If this is true, then this is probably a great ruling for JetBlue; they can buy up the scraps at bankruptcy if Spirit liquidates.
  - personjerry 3y ago
    Why would they have offered to buy them in the first place then?
    - hamburga 3y ago
      They didn’t want to wait.
    - kingkake 3y ago
      Frontier made an offer for Spirit.
      - rezonant 3y ago
        This. As best I understand, JetBlue is interested in the airport slots that Spirit currently holds across the country, because those are pretty much entirely locked up. To become a major national airline (which seems to JetBlue's goal specifically), you need these slots.
- brightball 3y ago
  This is the only thing that ever happens in my brain when I hear Spirit airlines now. https://www.youtube.com/watch?v=HTkr2AxC2eI https://www.youtube.com/watch?v=HTkr2AxC2eI
kalu 3y ago
Read the ruling and arguments on both sides here: https://www.courtlistener.com/docket/66962142/united-states-of-america-v-jetblue-airways-corporation/ https://www.courtlistener.com/docket/66962142/united-states-...
ChrisArchitect 3y ago
[dupe] Some more discussion: https://news.ycombinator.com/item?id=39019876 https://news.ycombinator.com/item?id=39019876
paul7986 3y ago
Bummer to read spirit might go under .. as a lite traveler ..stuff my clothes/belongings in a book bag ..spirit is very inexpensive and after ten or more good/fine flights in 2023 their my go to airline. None of my flights with them were any different than paying more to fly with the other more expensive airlines. My worst was a delta flight as they didn't clean the bathroom and it stink up the mid section of the plane and I paid double with delta vs. spirit.
- deadbabe 3y ago
  Ironically I think Spirit’s big front seats are the best value in the sky in terms of price and comfort, and they’re usually available if you book early enough.
  - anon373839 3y ago
    Yep, I have fiddled with my origin/destination cities just so I could take a Spirit flight with a Big Front Seat. The perks of a real domestic first class are nice, but the main thing you’re paying for is space to yourself. On Spirit, that space just costs a lot less.
  - markdown 3y ago
    > big front seats Do you mean business class?
    - avhon1 3y ago
      Spirit literally calls them "big front seats". https://customersupport.spirit.com/en-us/category/article/KA-01250 https://customersupport.spirit.com/en-us/category/article/KA...
    - School-Cotton 3y ago
      The seats are about as big as domestic first class on other airlines, but you don’t get upgraded service (e.g. free meals/drinks).
    - deadbabe 3y ago
chx 3y ago
Better later than never, the Continental-United merger was an absolute disaster and should've never been allowed.
- nashashmi 3y ago
  Great start to an interesting read... and then the end of a comment. /MildlyInfuriating.
  - chx 3y ago
    Not sure what you would like to read. How Continental and especially Jeff Smisek took over United in a merger closely resembling McDonnel-Boeing, resulting in financial trouble, dysfunctional computer systems, dissatisfied consumers having significantly less choice? (Eventually Smisek got fired and only the corrupt US legal system kept him from criminal charges and out of prison.) All this is well known and I didn't feel like typing up 10+ years of sad history.
_zagj 3y ago
Meanwhile MSFT, a monopolist megacap, was allowed to buy Activision-Blizzard?
- taspeotis 3y ago
  Yup, a firm monopoly on videogames if you ignore consoles [1], and PC (Steam, Epic) and mobile. [1] https://www.ign.com/articles/ps5-has-outsold-xbox-series-x-and-s-3-to-1-in-2023-new-data-reveals https://www.ign.com/articles/ps5-has-outsold-xbox-series-x-a...
  - Crosseye_Jack 3y ago
    And titles from indie devs / smaller studios (which I find myself going back to play much more these days, than titles from the "big boys").
  - nerdix 3y ago
    Last I checked JetBlue isn't a monopoly either (quite the opposite, in fact). That suggests that there are other reasons to block a merger other than preventing a monopoly from from growing.
    - avbanks 3y ago
      That was the joke.
- adabyron 3y ago
  The FTC of US & CMA of UK made Microsoft spend a ton of money to get that acquisition & tried very hard to block it. A US judge in California ruled the FTC had a bad case. Microsoft & Activision merging only moved them to the 3rd largest studio. Also it has plenty of pro competition factors allowing them to compete against Sony & Nintendo. They also made deals with many other distributors about expanding their game reach via cloud services. Lastly it allowed them to acquire King. Microsoft would like to break into mobile gaming more & there is a very monopolistic walled garden ala Google & Apple. Go after Microsoft for their monopolist tactics but this wasn't one.
Nisha_Saini 3y ago
[dead]
dtnewman 3y ago
I am personally happy with this decision. I don’t love flying spirit but I respect them, ever since hearing their former CEO speak on a Planet Money podcast. He said straight up that Spirit Airlines is aiming to be the Dollar General of the skies. If you want something luxurious, go elsewhere. But he called out the other airlines who pretend like they are the Nordstrom of the skies, but don’t actually live up to that.
- rootsudo 3y ago
  Well then say goodbye Spirit. They are about to enter bankruptcy.
- iclosem 3y ago
  But without this deal they will go bankrupt and then there will be no Dollar General of the skies and the customer loses. Maybe allowing private markets to work would have been a good idea?
  - corethree 3y ago
    It's utterly clear that free markets can fail and can eventually lead to all kinds of additional problems like wealth inequality and monopolies. This is clear. Nobody is clear about the right move on how to deal with this problem. There's no sure fire conclusion.
  - SOLAR_FIELDS 3y ago
    Can we even say that JetBlue succeeding and/or the merger moving forward would be a win for the consumer though? The problem with aerospace is that it has a very high barrier to entry, so consolidation ends up hurting the consumer more often than not. Same as other infra related industries like telcos and civil engineering work that require fairly massive upfront capital and regulatory investments to operate. Better to leave a hole in the market to encourage new entrants, even if it means consumers suffer in the short term.
    - squirrel6 3y ago
nerdjon 3y ago
As someone who basically flys exclusively JetBlue when I have the choice, I am disappointed by this. JetBlue's biggest problem remains their access to airports, if they were able to get more access to that they would likely be a serious threat to the bigger airlines. I don't understand how this is bad for competition when we desperately need more competition that can actually compete.
- FarMcKon 3y ago
  We had 14 regional / internal to the US airlines in the 80's. We had 10 airlines in the '00's. We have basically 4 or 6 national / regional airlines now. "JetBlue's biggest problem remains their access to airports, if they were able to get more access to that they would likely be a serious threat to the bigger airlines." That is like 'Their political party is cheating, we need to cheat bigger to win". That is leaning in to making the situation more and more rigged, more and more of a failed market / system. I will leave it as an exercise to the reader to go read about how less players in a market bad for competition. Matt Stoller is a good place to start. JetBlue can bid for slots at an airport, like anyone else. If bigger airlines are blocking them, lets fix that market to be competitive, NOT "let's help the market degrade into Oligopoly faster".
  - nerdponx 3y ago
    The market has already degraded into oligopoly. Spirit and/or JetBlue folding will only make that worse. This seems to be a common theme in politics. A bad decision was made by the previous generation. Now the current generation, seeing that the decision was bad, makes decisions that should have been made in the first place. The problem now is that the bad decisions have already been made, and what at one point would've been a good decision is now either exacerbating the problems caused by the bad decisions or is at best failing to remedy them. It comes up a lot in healthcare and immigration for example. What constitutes good policy is highly conditional on the current state of the world.
  - nerdjon 3y ago
    What were the reasons for that consolidation? Was it just simply that a small airline is not economically viable or is it a push for larger airlines? Considering the talk around Spirit being on the verge of bankruptcy it seems like it may be a mix of the 2 and the first one being an important part of this conversation. just saying lets fix the market while ignoring that there is a problem with the market with a potential thing to address part of it right in front of us is just passing on the problem until we have the perfect solution. That perfect solution may not be viable or may be many years away for a variety of problems (not the least of which being just a space problem at airports). We have a bad tendency to try to get the perfect solution to a problem which stops us from having anything.

149 points by i0exception 3y ago

jprd 3y ago

https://archive.is/MDYWF https://archive.is/MDYWF

If Alaska acquires Hawaiian then this would have to be decided ultimately by SCOTUS right? I would think these two cases are too similar and there needs to be some fairness and consistency in the rulings.

eganist 3y ago
I'm probably oversimplifying, but Alaska + Hawaiian creates a larger regional competitor to e.g American, United, and Southwest on a more local scale where most of their routes are complimentary (the two weren't substantially competing; Alaska offers a handful of CONUS to Hawaii routes, whereas Hawaiian offers CONUS as well as international routes to/from Hawaii), whereas JetBlue acquiring Spirit consolidates nationwide low-cost carriers and reduces low-cost competition
- vlovich123 3y ago
  It would probably still have an effect of raising prices for flights to/from Hawaii no?
  - eganist 3y ago
    Possibly, but it's not as abrupt and obvious as with JetBlue/Spirit, who both compete in the exact same market in modestly different ways. Alaska and Hawaiian have limited regional overlap with flights from certain west coast cities to certain islands, but beyond that, Alaska would be getting Hawaii's entire international route network and tying it in with their entire CONUS domestic route network. The more interesting transaction that arguably should've been stopped was Alaska purchasing Virgin America as they were both largely west coast airlines. But amazingly enough (as someone who held status on VA and later Alaska), my flights actually got cheaper after that merger, and I was consistently upgraded too. So if that merger hadn't happened, my experience would've been worse.
  - bobthepanda 3y ago
    That's easy enough to address with selling off Hawaii slots. To put this in perspective, 60 out of 566 JetBlue and Spirit routes overlap. Alaska and Hawaiian share 12 routes out of 336.
- stevehawk 3y ago
  The problem is that Spirit is but going to survive 2024. Between their debt situation and a number of their A320 Neos about to be grounded thanks to a Pratt and Whitney eff-up, they won't be around long enough to keep anything competitive.
  - babyshake 3y ago
    If this is the case, then an acquisition to prevent a competitor from going bankrupt should generally not be anti-competitive? Since, they would no longer be your competition anyways?
    - mathgeek 3y ago
      It could be seen as pro consumer, but it also could be seen as anti competitive. Spirit going under would open up space for a new competitor to potentially move in. An analogy would be two competing gas stations at a very busy intersection with no plots nearby to build more stations. Just by existing they either drive each other down on price or collude on it. One going under means a new station could exist, but one buying the other guarantees prices do not go down.
  - kelnos 3y ago
    If that's the case, why does JetBlue want to acquire them now? Why not wait until they file for bankruptcy protection, and likely get a much better deal?
    - ceejayoz 3y ago
      They'll have to compete with others on all the individual bits that way. No one else wants all of Spirit, but given the opportunity to pick and choose, some aircraft and landing slots are likely to be competed for.
  - cjrp 3y ago
    And their share price has just tanked ~50%. Maybe that was the plan all along...
- xvector 3y ago
  On a side note, I find it interesting that JetBlue is considered "low cost" but has the absolute best domestic business class by a long shot.
  - mmcconnell1618 3y ago
    I've always considered JetBlue to be a value leader vs. low cost leader. They have nicer seats, in seat entertainment in all classes and have a pricing/refund/exchange policy that is more customer friendly than competitors. Spirit is just going for low cost. Southwest is in between where they want low cost but you have to fight for a seat and might needs to have 2 or 3 stops to cross the country depending on where you start. I assume you're talking about JetBlue's Mint product which is all business class for some cross country flights and a few international. Again, I think they are trying to provide the best value for business class compared to the larger carriers.
    - trbleclef 3y ago
      They also have free wifi, which even Southwest still doesn't offer.
maximilianroos 3y ago
No — the Supreme Court will often review circuit splits in law, but these are splits in facts

jsyang00 3y ago

This is a bad ruling, Spirit is likely to go under without acquisition. Neither firm had particularly large share of market.

apapapa 3y ago
So its a good decision ... For the large airlines.
eganist 3y ago
If this is true, then this is probably a great ruling for JetBlue; they can buy up the scraps at bankruptcy if Spirit liquidates.
- personjerry 3y ago
  Why would they have offered to buy them in the first place then?
  - hamburga 3y ago
    They didn’t want to wait.
  - kingkake 3y ago
    Frontier made an offer for Spirit.
    - rezonant 3y ago
      This. As best I understand, JetBlue is interested in the airport slots that Spirit currently holds across the country, because those are pretty much entirely locked up. To become a major national airline (which seems to JetBlue's goal specifically), you need these slots.
brightball 3y ago
This is the only thing that ever happens in my brain when I hear Spirit airlines now. https://www.youtube.com/watch?v=HTkr2AxC2eI https://www.youtube.com/watch?v=HTkr2AxC2eI

kalu 3y ago

Read the ruling and arguments on both sides here: https://www.courtlistener.com/docket/66962142/united-states-of-america-v-jetblue-airways-corporation/ https://www.courtlistener.com/docket/66962142/united-states-...

ChrisArchitect 3y ago

[dupe] Some more discussion: https://news.ycombinator.com/item?id=39019876 https://news.ycombinator.com/item?id=39019876

paul7986 3y ago

Bummer to read spirit might go under .. as a lite traveler ..stuff my clothes/belongings in a book bag ..spirit is very inexpensive and after ten or more good/fine flights in 2023 their my go to airline. None of my flights with them were any different than paying more to fly with the other more expensive airlines. My worst was a delta flight as they didn't clean the bathroom and it stink up the mid section of the plane and I paid double with delta vs. spirit.

deadbabe 3y ago
Ironically I think Spirit’s big front seats are the best value in the sky in terms of price and comfort, and they’re usually available if you book early enough.
- anon373839 3y ago
  Yep, I have fiddled with my origin/destination cities just so I could take a Spirit flight with a Big Front Seat. The perks of a real domestic first class are nice, but the main thing you’re paying for is space to yourself. On Spirit, that space just costs a lot less.
- markdown 3y ago
  > big front seats Do you mean business class?
  - avhon1 3y ago
    Spirit literally calls them "big front seats". https://customersupport.spirit.com/en-us/category/article/KA-01250 https://customersupport.spirit.com/en-us/category/article/KA...
  - School-Cotton 3y ago
    The seats are about as big as domestic first class on other airlines, but you don’t get upgraded service (e.g. free meals/drinks).
  - deadbabe 3y ago

chx 3y ago

Better later than never, the Continental-United merger was an absolute disaster and should've never been allowed.

nashashmi 3y ago
Great start to an interesting read... and then the end of a comment. /MildlyInfuriating.
- chx 3y ago
  Not sure what you would like to read. How Continental and especially Jeff Smisek took over United in a merger closely resembling McDonnel-Boeing, resulting in financial trouble, dysfunctional computer systems, dissatisfied consumers having significantly less choice? (Eventually Smisek got fired and only the corrupt US legal system kept him from criminal charges and out of prison.) All this is well known and I didn't feel like typing up 10+ years of sad history.

_zagj 3y ago

Meanwhile MSFT, a monopolist megacap, was allowed to buy Activision-Blizzard?

taspeotis 3y ago
Yup, a firm monopoly on videogames if you ignore consoles [1], and PC (Steam, Epic) and mobile. [1] https://www.ign.com/articles/ps5-has-outsold-xbox-series-x-and-s-3-to-1-in-2023-new-data-reveals https://www.ign.com/articles/ps5-has-outsold-xbox-series-x-a...
- Crosseye_Jack 3y ago
  And titles from indie devs / smaller studios (which I find myself going back to play much more these days, than titles from the "big boys").
- nerdix 3y ago
  Last I checked JetBlue isn't a monopoly either (quite the opposite, in fact). That suggests that there are other reasons to block a merger other than preventing a monopoly from from growing.
  - avbanks 3y ago
    That was the joke.
adabyron 3y ago
The FTC of US & CMA of UK made Microsoft spend a ton of money to get that acquisition & tried very hard to block it. A US judge in California ruled the FTC had a bad case. Microsoft & Activision merging only moved them to the 3rd largest studio. Also it has plenty of pro competition factors allowing them to compete against Sony & Nintendo. They also made deals with many other distributors about expanding their game reach via cloud services. Lastly it allowed them to acquire King. Microsoft would like to break into mobile gaming more & there is a very monopolistic walled garden ala Google & Apple. Go after Microsoft for their monopolist tactics but this wasn't one.

Nisha_Saini 3y ago

[dead]

dtnewman 3y ago

I am personally happy with this decision. I don’t love flying spirit but I respect them, ever since hearing their former CEO speak on a Planet Money podcast. He said straight up that Spirit Airlines is aiming to be the Dollar General of the skies. If you want something luxurious, go elsewhere. But he called out the other airlines who pretend like they are the Nordstrom of the skies, but don’t actually live up to that.

rootsudo 3y ago
Well then say goodbye Spirit. They are about to enter bankruptcy.
iclosem 3y ago
But without this deal they will go bankrupt and then there will be no Dollar General of the skies and the customer loses. Maybe allowing private markets to work would have been a good idea?
- corethree 3y ago
  It's utterly clear that free markets can fail and can eventually lead to all kinds of additional problems like wealth inequality and monopolies. This is clear. Nobody is clear about the right move on how to deal with this problem. There's no sure fire conclusion.
- SOLAR_FIELDS 3y ago
  Can we even say that JetBlue succeeding and/or the merger moving forward would be a win for the consumer though? The problem with aerospace is that it has a very high barrier to entry, so consolidation ends up hurting the consumer more often than not. Same as other infra related industries like telcos and civil engineering work that require fairly massive upfront capital and regulatory investments to operate. Better to leave a hole in the market to encourage new entrants, even if it means consumers suffer in the short term.
  - squirrel6 3y ago

nerdjon 3y ago

As someone who basically flys exclusively JetBlue when I have the choice, I am disappointed by this. JetBlue's biggest problem remains their access to airports, if they were able to get more access to that they would likely be a serious threat to the bigger airlines. I don't understand how this is bad for competition when we desperately need more competition that can actually compete.

FarMcKon 3y ago
We had 14 regional / internal to the US airlines in the 80's. We had 10 airlines in the '00's. We have basically 4 or 6 national / regional airlines now. "JetBlue's biggest problem remains their access to airports, if they were able to get more access to that they would likely be a serious threat to the bigger airlines." That is like 'Their political party is cheating, we need to cheat bigger to win". That is leaning in to making the situation more and more rigged, more and more of a failed market / system. I will leave it as an exercise to the reader to go read about how less players in a market bad for competition. Matt Stoller is a good place to start. JetBlue can bid for slots at an airport, like anyone else. If bigger airlines are blocking them, lets fix that market to be competitive, NOT "let's help the market degrade into Oligopoly faster".
- nerdponx 3y ago
  The market has already degraded into oligopoly. Spirit and/or JetBlue folding will only make that worse. This seems to be a common theme in politics. A bad decision was made by the previous generation. Now the current generation, seeing that the decision was bad, makes decisions that should have been made in the first place. The problem now is that the bad decisions have already been made, and what at one point would've been a good decision is now either exacerbating the problems caused by the bad decisions or is at best failing to remedy them. It comes up a lot in healthcare and immigration for example. What constitutes good policy is highly conditional on the current state of the world.
- nerdjon 3y ago
  What were the reasons for that consolidation? Was it just simply that a small airline is not economically viable or is it a push for larger airlines? Considering the talk around Spirit being on the verge of bankruptcy it seems like it may be a mix of the 2 and the first one being an important part of this conversation. just saying lets fix the market while ignoring that there is a problem with the market with a potential thing to address part of it right in front of us is just passing on the problem until we have the perfect solution. That perfect solution may not be viable or may be many years away for a variety of problems (not the least of which being just a space problem at airports). We have a bad tendency to try to get the perfect solution to a problem which stops us from having anything.