JetBlue Airways has accused the US Department of Justice (DOJ) of “taking inconsistent positions” in respective lawsuits to break up JetBlue’s Northeast Alliance (NEA) with American Airlines and block its proposed acquisition of Spirit Airlines.
In a 11 September filing with the US District Court for the District of Massachusetts, JetBlue argues that “judicial estoppel prevents DOJ from switching positions” regarding its $3.8 billion bid to acquire Spirit.
”Litigants… are not permitted to successfully advance an argument in one case and make the opposite one in a second proceeding,” JetBlue says.
JetBlue further alleges that the DOJ’s admissions during its successful NEA case ”undermine all of its arguments against the merger here”.
The DOJ is seeking to block JetBlue’s acquisition of Spirit in an antitrust lawsuit set for a court trial next month in Boston. JetBlue insists that its proposed combination with Spirit would boost competition with the “big four” US carriers – American, Delta Air Lines, Southwest Airlines and United Airlines – while also increasing the number of low-cost flights.
Federal attorneys argue otherwise. The DOJ said in its 7 March lawsuit that the deal would eliminate a leading discount carrier from the market and limit consumer options for affordable air travel. The agency has characterised the JetBlue-Spirit deal as a “high-cost, high-fare airline buying a low-cost, low-fare airline”.
JetBlue’s 11 September motion requests the court to recognise “the assertions the DOJ made in the NEA trial that characterise JetBlue as a ‘maverick’ airline and prevent the DOJ from switching positions in this case”, says an airline spokesperson.
“This motion arises from the startling switch in positions by the [DOJ] with respect to the completive role that JetBlue in the airline marketplace,” the airline says. ”Just last year, DOJ touted JetBlue as the antidote to the dominance of the legacy airlines and persuaded another court… that JetBlue is a ‘maverick’ airline that makes it less likely for airlines to coordinate.
”In this case, in an effort to stop the JetBlue/Spirit merger, DOJ is saying the opposite: the transaction should not be allowed to proceed because it will facilitate collusion between JetBlue and its airline rivals post-merger,” the carrier adds.
The New York-based airline points to the DOJ’s repeated references to the so-called “JetBlue effect” – a term coined by a 2013 analysis of domestic air fares in the USA by the Massachusetts Institute of Technology – in which ticket prices decrease when JetBlue enters a market and decrease when it leaves.
“The JetBlue effect arises because, as DOJ repeatedly proclaimed, JetBlue offers a unique value proposition – low fares and high quality – that allow it to discipline the legacies in a way other low-cost airlines (like Spirit) cannot,” the carrier says in the court documents.
JetBlue’s motion is the latest sign that the low-cost carrier is fighting hard to preserve its planned combination with Spirit.
Also on 11 September, the carrier commited to transferring some of Spirit’s gates and take-off and landing slots in the Northeast USA and South Florida to competitor Allegiant Air if the proposed acquisition is finalised. The airline disclosed in June a similar deal in which it would transfer Spirit’s assets at New York’s LaGuardia airport to Frontier Airlines, pending the deal’s completion.
JetBlue maintains that its acquisition of Spirit will close by the end of the first half of 2024.
