As JetBlue prepares to begin its takeover of Spirit Airlines in a $3.8 billion deal, many are left wondering what the future holds for both airlines and their loyal customers.
The JetBlue-Spirit agreement still faces a shareholder vote and regulatory approval, which could prove difficult if federal officials believe the deal would reduce competition and increase fares. Spirit is known for its barebones and deeply discounted fares, while JetBlue is more of a full-service airline.
“I think it’s bad news for travelers,” Scott Keyes, founder of Scott’s Cheap Flights, said in an interview with ABC News. “Competition between airlines is the single biggest determinant of how many cheap flights you see on any given route.”
Keyes said Spirit is an “anchor” in the airfare market and its low fares tend to drive down ticket prices offered by mainline carriers.
“Your Delta fares, your American fares are actually cheaper if they’re on a route where they’re competing with Spirit, because they need to drop those fares to try to compete and get more customers,” Keyes said.
JetBlue’s CEO Robin Hayes said the acquisition could be a “solution to the lack of competition” in the U.S. airline industry, saying in a press release, “Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to bring down fares from the Big Four airlines.”
While experts say the Spirit shareholder vote should pass, JetBlue is expected to face regulatory hurdles.
“[The Department of Justice] will try to model what will happen with one fewer airline. What will that do to route structure, to load factors, capacity and fares,” Ravi Sarathy, professor of International Business and Strategy at Northeastern University’s D’Amore-McKim School of Business, told ABC News. “And they’ll also try to model whether this will improve overall air quality and flight service quality.”
Sarathy said the merger could help improve JetBlue’s product. With the $3.8 billion purchase, JetBlue would also gain Spirit’s Airbus fleet and its pilot staffing – both in high demand as airlines face the ongoing pilot shortage and delayed aircraft deliveries amid supply chain disruptions.
“The question will be, do Spirit passengers want better service, or are they really more concerned about the lowest possible cost of flying?” Sarathy said. “That remains to be seen.”
JetBlue offers lie-flat seats on some transcontinental routes and to London, while Spirit does not have a first/business class cabin. JetBlue also offers free, seatback in-flight entertainment and snacks; Spirit does not have inflight televisions or free food. It’s unclear how the two airlines would blend their products if a merger is approved.
Spirit shareholders are expected to vote next month on the merger. If that vote passes, a review from the federal government could take months if not years.
