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.
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.
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?