In July 2022, the plan for a $3.8 billion merger between JetBlue and Spirit was announced. The challenge is that the two airlines are facing major regulatory hurdles, as the Department of Justice (DOJ) is suing to block this merger.
If the merger is approved, JetBlue’s goal is to become the fifth largest airline, and compete more directly with the “big four.” The government’s concern is that an ultra low cost carrier would be eliminated, which it argues would be bad for competition.
JetBlue is doing everything it can to convince the government that this merger will be good for consumers. Back in June, JetBlue announced a slot divestiture agreement with Frontier, and now JetBlue has announced a similar agreement with Allegiant. This is pretty significant, so let’s go over all the details.
In this post:
JetBlue & Frontier slot divestiture agreement
Back in June 2023, JetBlue and Frontier entered into a definitive agreement under which JetBlue will divest all of Spirit’s holdings at New York LaGuardia Airport (LGA) to Frontier, in connection with the merger.
These divestitures are part of JetBlue’s upfront commitments included in the merger agreement with Spirit, and are conditioned on the closing of the JetBlue and Spirit transaction. Under the agreement, JetBlue has agreed to transfer six gates at the LaGuardia Marine Air Terminal and 22 takeoff and landing slots to Frontier.
Here’s what JetBlue CEO Robin Hayes had to say about this deal:
“We are committed to ensuring our combination with Spirit preserves ultra low-cost carrier access in New York. We are pleased that this agreement with Frontier will maintain the same level of ultra low-cost carrier service at LaGuardia Airport.”
Meanwhile here’s what Frontier CEO Barry Biffle had to say about this deal:
“We’re pleased to have reached this agreement to acquire Spirit’s slot pairs and leasehold interests at New York’s LaGuardia Airport, pending regulatory approval of the JetBlue-Spirit merger. It will enable us to significantly expand our operations at LaGuardia and deliver even more ‘Low Fares Done Right’ to consumers in the greater New York City area.”
JetBlue & Allegiant slot divestiture agreement
Now JetBlue and Allegiant have entered into a definitive agreement under which JetBlue will divest all of Spirit’s holdings at Boston Logan Airport (BOS) and Newark Liberty Airport (EWR), as well as five gates and related ground facilities at Fort Lauderdale Hollywood Airport (FLL) to Allegiant, in connection with the merger. This includes two gates in Boston, two gates in Newark, and 42 takeoff and landing slots at Newark.
Here’s what Allegiant Chief Revenue Officer Drew Wells had to say about this deal:
“We are committed to long-term growth, especially in areas such as New York, Boston and Florida. This agreement will allow us to expand our service in these cities and ensure that customers have even more access to affordable, nonstop flights for their travel needs.”
Is the JetBlue & Spirit merger now more likely?
It’s not surprising that JetBlue really wants the Spirit merger to close, even if the economics are somewhat questionable. I can’t help but think that we’re getting closer to the point where a deal could be reached:
- The DOJ sued to block the Northeast Alliance between American and JetBlue, and a judge ruled against the alliance; the airlines ended their partnership as of July 2023
- That partnership being broken up puts JetBlue in a better position to get this deal approved
- JetBlue is making some major concessions here, giving up a significant presence in four key markets, allowing other ultra low cost carriers to grow
I can’t help but think that we’re inching closer to a merger being approved, though I suspect this won’t be the last of the concessions that we see.
Bottom line
With the JetBlue and Spirit merger facing a lawsuit from the Department of Justice, JetBlue is doing everything it can to convince regulators that this merger is good for consumers.
The airline has now made significant commitments to both Frontier and Allegiant in terms of offering them gates and slots in some pretty important markets, in order to promote the continued growth of ultra low cost carriers. When you combine this with the Northeast Alliance having been eliminated, you’d think that we’re closer to this merger becoming a reality.
What do you make of the current odds of a JetBlue and Spirit merger being approved?
Jetblue is nice
And spirt is spirt
But is about the money and the slots at l.a airport is important to jetblue
But I FEEL SORRY FOR THE CONSOMERS THAT CANT AFFORD IT
IS ABOUT business not pleasure
I wish this merger does NOT happen. I appreciate Spirit and the ability to fly super cheap with just a backpack for short trips. I highly doubt this is better for most of the consumers.
I want this merger to happen because it's actually a good match. I love JetBlue, but they are limited in scope. They are more of a regional airlines with better quality product. Spirit, is a much larger airline with a national presence, but a terrible product. This merger will give the national presence that JetBlue needs with a much better product that Spirit never had.
As a fan of Spirit and their model, I think this whole thing is garbage. If you want to be a legacy airline why buy a bargain carrier ? I think this is more about quashing competition on transcontinental flights. I can routinely get LAX to EWR Spirit flights with the Big Front Seat for $350. Jet Blue's Mint is easily double that, and simply not worth it. So the days of having any affordable...
As a fan of Spirit and their model, I think this whole thing is garbage. If you want to be a legacy airline why buy a bargain carrier ? I think this is more about quashing competition on transcontinental flights. I can routinely get LAX to EWR Spirit flights with the Big Front Seat for $350. Jet Blue's Mint is easily double that, and simply not worth it. So the days of having any affordable options for first class level seats are over. Unless Breeze succeeds. And that's years off if it ever happens. Is absorbing Spirit worth it just for that reason? When I see legacy transcontinental seats in first for $1000 on nonstops, I'm sure JB would love to kill off Spirit to to position Mint as a barely cheaper option than the big 3s first class price. And seriously, does anyone think Spirit customers will become Jet Blue customers ? No way. They're off to SWA.
SMH... Allegiant is famous for departure time cancellations. You get a text message on your phone and attempt to rebook yourself bcuz there are 250 pax's in line checking in for other flights and those needing rebooking assistance. After Allegiant tells you they can't confirm you for 3 more days you end up schlepping down to DL or AA and paying an outrageous walk up fare but at least they can get you there. It's...
SMH... Allegiant is famous for departure time cancellations. You get a text message on your phone and attempt to rebook yourself bcuz there are 250 pax's in line checking in for other flights and those needing rebooking assistance. After Allegiant tells you they can't confirm you for 3 more days you end up schlepping down to DL or AA and paying an outrageous walk up fare but at least they can get you there. It's way cheaper to book your trip ahead of time on a mainline carrier- they have options. Alligiant does not.
Some kind of divestiture is probably inevitable in this kind of transaction, so why not get ahead of it?
Presumably JetBlue doesn't see itself strictly as an ULCC and therefor might be willing to cede the bottom on the market to Frontier and Allegiant. It's pretty apparent that JetBlue wants to be more of a legacy airline.
people that don't want it to happen, a no go on what grounds? have you ever even flown spirit or any other ULCC? people that are most against this never even flew a ULCC, please stop clutching pearls and really look.
you complain that it removes a ULCC disruptor... but you can't compare bundled vs unbundled. look at the whole picture of average prices once those are factored in.
also the ULCC business model is...
people that don't want it to happen, a no go on what grounds? have you ever even flown spirit or any other ULCC? people that are most against this never even flew a ULCC, please stop clutching pearls and really look.
you complain that it removes a ULCC disruptor... but you can't compare bundled vs unbundled. look at the whole picture of average prices once those are factored in.
also the ULCC business model is struggling heavily right now. it doesn't scale well with inflationary pressures and rising oil, not to mention the labor disputes and their engine issues.
you can't dictate a company has to sell it's services at a set price which spirit will no longer be able to do.
i have never flown spirit / frontier but still feel theyre good for all consumers. even though you likely end up paying way more than sticker price once you add on ancillaries, the sticker price is often what people 'notice' and use for comparison shopping. thus, legacy carriers often have to lower fares to compete in a market with ULCC competition. Admittedly, the ULCC competition has spawned some negative changes at legacy carriers (like United...
i have never flown spirit / frontier but still feel theyre good for all consumers. even though you likely end up paying way more than sticker price once you add on ancillaries, the sticker price is often what people 'notice' and use for comparison shopping. thus, legacy carriers often have to lower fares to compete in a market with ULCC competition. Admittedly, the ULCC competition has spawned some negative changes at legacy carriers (like United / JetBlue no longer allowing free carry on bag in their lowest fare buckets), but on the whole, i have to believe its been somewhat effecting at Keeping fares in check.
Still say this JetBlue/SPIRIT merger should be a No Go because it is anti consumer and eliminates an ULLC alternative. SPIRIT/Frontier would have been a solid improvement but the likelihood of JetBlue accomplishing what it needs to do to compete with the Big Four will prove to be financially draining and drive the carrier straight to BK. JetBlue flying Transatlantic with low density narrowbody aircraft will face incredible competition from the Big Three (AA/DL/UAL) and...
Still say this JetBlue/SPIRIT merger should be a No Go because it is anti consumer and eliminates an ULLC alternative. SPIRIT/Frontier would have been a solid improvement but the likelihood of JetBlue accomplishing what it needs to do to compete with the Big Four will prove to be financially draining and drive the carrier straight to BK. JetBlue flying Transatlantic with low density narrowbody aircraft will face incredible competition from the Big Three (AA/DL/UAL) and their respective Alliance partners and none of the Alliances had any interest in adding JetBlue in the past or moving forward.