Spirit Airlines plane at Orlando Airport (photo by Eric Bowman)
The United States government received a letter on Thursday from several public advocacy groups asking regulators to block the previously announced deal between Frontier Group Holdings and Spirit Airlines Inc.
According to Reuters.com, Frontier Airlines announced in February it would purchase Spirit Airlines as part of a $2.9 billion agreement that would create America’s fifth-largest carrier, but advocacy groups said the move could “destroy competition.”
Public Citizen, Fight for the Future, the American Economic Liberties Project and six additional groups issued a letter to the Transportation and Justice Departments outlining the potential issues associated with the proposed merger of low-cost airlines.
The letter obtained by Reuters said the deal “would destroy competition in the only competitive market segment of the highly consolidated airline industry…Travelers will pay higher prices for fewer and lower quality options, workers will lose their jobs, and smaller firms will be muscled out of a once-competitive market segment.”
In addition, several U.S. lawmakers have also raised concerns about the proposed merger, saying “resulting Spirit-Frontier carrier could hurt consumers in numerous ways, consolidating market power for the airlines and reducing choices for travelers.”
Last month, Frontier and Spirit announced the $2.9 billion deal—cash-and-stock agreement is valued at $6.6 billion—was designed to help the low-cost carriers compete with the “Big Four” U.S. airlines.
When the agreement was made public, officials from the airlines said they anticipate $1 billion in annual consumer savings and a massive expansion with more than 350 aircraft on order. They also pledged to add 10,000 direct jobs by 2026.
In December, the U.S. Department of Justice asked a federal judge to proceed with its lawsuit against the ‘Northeast Alliance’ formed by American Airlines and JetBlue Airways.