4 ms·

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. H

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
    I agree with you even though I think some will view this as a hot take. It is interesting that the US government has historically subsidized both smaller telcos and airlines to fill these types of small gaps where they exist.
- pxx 3y ago
  Considering reorganization under bankruptcy is not equivalent to going out of business.
  - deleted 3y ago
    [deleted]
  - HWR_14 3y ago
    While true, it is equivalent to shareholders in that they get wiped out.
    - no_wizard 3y ago
      I don't feel sorry for shareholders here. There are risks with all investments and its not as if Spirit mislead investors or acted fraudulently. Sometimes, investments go bad, thats the risk. We shouldn't prioritize shareholders over the general health of a marketplace
      - HWR_14 3y ago
        But it makes sense that with those alternatives shareholders would vote in favor of a buyout or a merger.
  - squirrel6 3y ago
    There’s not a lot of room for effective restructuring here — for Spirit it’s more of a revenue problem rather than just a debt service problem. They’d probably end up in Chapter 7 (liquidation) pretty soon after starting Chapter 11 proceedings
- tyingq 3y ago
  Spirit runs with a 28 inch seat pitch, which is often physically shorter than the distance between someone's rear end and knee caps[1]. It's an unusual choice. Most other low cost carriers have 31 inches or more. I'm not sure Dollar General is the right comparison. [1] Once you account for the padding, the angle you have to sit at, etc. Even if you aren't unusually tall, it is noticeably awkward and cramped.
  - coldcode 3y ago
    I have never flown Spirit due to being 6'5". 30 in seat pitch is anatomically the limit, and that hurts. JetBlue having 33 in makes it a good choice for me.
    - dgfitz 3y ago
      I am the same height, and I have, and by golly was it a miserable flight. Never again.
- edgyquant 3y ago
  Sounds like spirit is not a sustainable business and that is an issue unrelated to the merger. Unsustainable businesses fail, so let them fail
  - closeparen 3y ago
    The purpose of blocking mergers is to promote competition, which is plainly not achieved if the acquisition target is not sustainable on its own.
adabyron 3y ago
It should be noted that these were 2 small airlines trying to merge together with very little overlap & a willingness to divest more if the Government would work with them. The government refused to talk divestures & it seemed just wanted to block this deal to set a precedence. I do not think they care about Spirit's future or competition here. Another important item from the trial - only 1/3 of Spirit customers pay the low fee without add-ons. The rest go for something more Jet Blue like anyways. The precedence that the judge set here is more important than the actual merger. If any tiny subset of customers are harmed the deal cannot go through. I was really surprised to see this from a judge appointed by President Reagan. This could really crush M&As in America.
- toyg 3y ago
  > I was really surprised to see this from a judge appointed by President Reagan Really? How old is he, 80? Why do Americans insist in having such geriatric leaders, they're starting to make Iran look normal...
- nashashmi 3y ago
  > The Justice Department argued that smaller, low-cost airlines like Spirit helped reduce fares and that allowing the company to be acquired by JetBlue, which tends to charge higher prices than Spirit, would have hurt consumers. In the new era, practices, perceptions and mission statements have to also be up to a standard, not just statistics. I wonder how long this could go on for.
- rising-sky 3y ago
  > Rivals on average cut prices 7% to 11% when Spirit enters a market[1][2]. The same cannot be said for JetBlue > “If JetBlue were permitted to gobble up Spirit — at least as proposed — it would eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline,” Young wrote. “… Worse yet, the merger would likely incentivize JetBlue further to abandon its roots as a maverick, low-cost carrier.”[2] > This could really crush M&As in America. That's a bit hyperbolic. If it does crush anti-competitive / anti-trust mergers, that's a win in any capitalist's book [1] https://money.usnews.com/investing/news/articles/2024-01-16/us-judge-blocks-jetblue-from-acquiring-spirit-airlines#:~:text=Rivals%20on%20average%20cut%20prices,would%20constitute%20a%20cognizable%20harm.%22 https://money.usnews.com/investing/news/articles/2024-01-16/... [2] https://www.washingtonpost.com/transportation/2024/01/16/jetblue-spirit-merger-decision-blocked/ https://www.washingtonpost.com/transportation/2024/01/16/jet...
haliskerbas 3y ago
Spirit also doesn’t live up to that in my experience. Their cost structure nickel and dimes the consumer so much that by the time you get to the destination you may have paid more for a much less comfortable trip. At least in my anecdotal experience.
- TinyRick 3y ago
  > Their cost structure nickel and dimes the consumer so much that by the time you get to the destination you may have paid more for a much less comfortable trip That lends more credence to the comparison against Dollar General and similar discount stores. Dollar stores generally charge a higher price relative to quantity, but they offer smaller quantities than big box stores which allows their customers to spend less (but also get a lot less). Wendover on YouTube did a video on this recently [0]. [0] https://www.youtube.com/watch?v=vQpUV--2Jao https://www.youtube.com/watch?v=vQpUV--2Jao
- thehappypm 3y ago
  Yes. But this is super transparent on their site. You can get super cheap flights if you don’t care about checking bags, in-flight sodas, and so on.
  - setr 3y ago
    To add credence to that statement… LAX to LAS is a $20 flight one-way through spirit. It’s cheaper to fly a family of four than drive. It’s wild how cheap spirit becomes on certain routes, especially short hops where you can trivially get away with nothing extra
    - OkayPhysicist 3y ago
      For Spirit, a carry-on is considered an extra. That's an extra $35 right there, which brings it pretty much inline with Southwest's pricing.
      - mdhen 3y ago

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
  I agree with you even though I think some will view this as a hot take. It is interesting that the US government has historically subsidized both smaller telcos and airlines to fill these types of small gaps where they exist.
pxx 3y ago
Considering reorganization under bankruptcy is not equivalent to going out of business.
- deleted 3y ago
  [deleted]
- HWR_14 3y ago
  While true, it is equivalent to shareholders in that they get wiped out.
  - no_wizard 3y ago
    I don't feel sorry for shareholders here. There are risks with all investments and its not as if Spirit mislead investors or acted fraudulently. Sometimes, investments go bad, thats the risk. We shouldn't prioritize shareholders over the general health of a marketplace
    - HWR_14 3y ago
      But it makes sense that with those alternatives shareholders would vote in favor of a buyout or a merger.
- squirrel6 3y ago
  There’s not a lot of room for effective restructuring here — for Spirit it’s more of a revenue problem rather than just a debt service problem. They’d probably end up in Chapter 7 (liquidation) pretty soon after starting Chapter 11 proceedings
tyingq 3y ago
Spirit runs with a 28 inch seat pitch, which is often physically shorter than the distance between someone's rear end and knee caps[1]. It's an unusual choice. Most other low cost carriers have 31 inches or more. I'm not sure Dollar General is the right comparison. [1] Once you account for the padding, the angle you have to sit at, etc. Even if you aren't unusually tall, it is noticeably awkward and cramped.
- coldcode 3y ago
  I have never flown Spirit due to being 6'5". 30 in seat pitch is anatomically the limit, and that hurts. JetBlue having 33 in makes it a good choice for me.
  - dgfitz 3y ago
    I am the same height, and I have, and by golly was it a miserable flight. Never again.
edgyquant 3y ago
Sounds like spirit is not a sustainable business and that is an issue unrelated to the merger. Unsustainable businesses fail, so let them fail
- closeparen 3y ago
  The purpose of blocking mergers is to promote competition, which is plainly not achieved if the acquisition target is not sustainable on its own.

adabyron 3y ago

It should be noted that these were 2 small airlines trying to merge together with very little overlap & a willingness to divest more if the Government would work with them. The government refused to talk divestures & it seemed just wanted to block this deal to set a precedence. I do not think they care about Spirit's future or competition here. Another important item from the trial - only 1/3 of Spirit customers pay the low fee without add-ons. The rest go for something more Jet Blue like anyways. The precedence that the judge set here is more important than the actual merger. If any tiny subset of customers are harmed the deal cannot go through. I was really surprised to see this from a judge appointed by President Reagan. This could really crush M&As in America.

toyg 3y ago
> I was really surprised to see this from a judge appointed by President Reagan Really? How old is he, 80? Why do Americans insist in having such geriatric leaders, they're starting to make Iran look normal...
nashashmi 3y ago
> The Justice Department argued that smaller, low-cost airlines like Spirit helped reduce fares and that allowing the company to be acquired by JetBlue, which tends to charge higher prices than Spirit, would have hurt consumers. In the new era, practices, perceptions and mission statements have to also be up to a standard, not just statistics. I wonder how long this could go on for.
rising-sky 3y ago
> Rivals on average cut prices 7% to 11% when Spirit enters a market[1][2]. The same cannot be said for JetBlue > “If JetBlue were permitted to gobble up Spirit — at least as proposed — it would eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline,” Young wrote. “… Worse yet, the merger would likely incentivize JetBlue further to abandon its roots as a maverick, low-cost carrier.”[2] > This could really crush M&As in America. That's a bit hyperbolic. If it does crush anti-competitive / anti-trust mergers, that's a win in any capitalist's book [1] https://money.usnews.com/investing/news/articles/2024-01-16/us-judge-blocks-jetblue-from-acquiring-spirit-airlines#:~:text=Rivals%20on%20average%20cut%20prices,would%20constitute%20a%20cognizable%20harm.%22 https://money.usnews.com/investing/news/articles/2024-01-16/... [2] https://www.washingtonpost.com/transportation/2024/01/16/jetblue-spirit-merger-decision-blocked/ https://www.washingtonpost.com/transportation/2024/01/16/jet...

haliskerbas 3y ago

Spirit also doesn’t live up to that in my experience. Their cost structure nickel and dimes the consumer so much that by the time you get to the destination you may have paid more for a much less comfortable trip. At least in my anecdotal experience.

TinyRick 3y ago
> Their cost structure nickel and dimes the consumer so much that by the time you get to the destination you may have paid more for a much less comfortable trip That lends more credence to the comparison against Dollar General and similar discount stores. Dollar stores generally charge a higher price relative to quantity, but they offer smaller quantities than big box stores which allows their customers to spend less (but also get a lot less). Wendover on YouTube did a video on this recently [0]. [0] https://www.youtube.com/watch?v=vQpUV--2Jao https://www.youtube.com/watch?v=vQpUV--2Jao
thehappypm 3y ago
Yes. But this is super transparent on their site. You can get super cheap flights if you don’t care about checking bags, in-flight sodas, and so on.
- setr 3y ago
  To add credence to that statement… LAX to LAS is a $20 flight one-way through spirit. It’s cheaper to fly a family of four than drive. It’s wild how cheap spirit becomes on certain routes, especially short hops where you can trivially get away with nothing extra
  - OkayPhysicist 3y ago
    For Spirit, a carry-on is considered an extra. That's an extra $35 right there, which brings it pretty much inline with Southwest's pricing.
    - mdhen 3y ago