Will JetBlue-Spirit Merger Really Mean Lower Fares?

Will JetBlue-Spirit Merger Really Mean Lower Fares?

Questions still remain about the merger between Spirit Airlines and JetBlue Airways. (graphic by Kevin Smith/Flickr)

Here’s what the headline screamed across the top of the emailed press release early Thursday morning:

JetBlue and Spirit to Create a National Low-Fare Challenger to the Dominant Big Four Airlines

The acquisition by JetBlue of low-budget carrier Spirit will create the nation’s fifth-largest airline and came after months of parrying back and forth between the two carriers as well as Spirit’s original suitor, Frontier Airlines.

So, the deal is done. Or is it?

And with it comes the promise of low fares. Or does it?

Some in the industry question whether a JetBlue-Spirit combination will survive government scrutiny and, if it does, there’s the question of whether a newly revamped JetBlue would be able to maintain Spirit’s budget airfares.

Without sounding like a spurned lover, Frontier Airlines CEO Barry Biffle told Yahoo Finance he expects to see a rise, not a decrease, in ticket prices if you’re coming at it from the perspective of a Spirit Airlines fan.

“If you are a Spirit customer, you will see the biggest inflation you have ever seen,” Biffle said. “You’re going to see fares jump up over 40 percent. It’s going to be hundreds of dollars per family. And so that’s why I think it’s a challenge for their consumers. There are going to be millions of people that get priced out.”

JetBlue quickly defended itself, telling Yahoo Finance that customers will still be able to enjoy the benefits of “JetBlue’s unique combination of low fares and award-winning service. Importantly, our presence on new routes is proven to bring down legacy fares more than ultra-low-cost carriers, benefitting customers and stimulating demand. So, this is a win for customers – whether you fly JetBlue or another airline.”

Nonetheless, the fact remains that shuttering Spirit Airlines and folding it into the JetBlue brand – which will still take years, experts say – means the loss of Spirit. And whether you’re a fan of the no-frills approach or not, it also means the loss of another domestic low-budget carrier.

“Spirit has empowered so many people to fly who might not have been able to afford to before,” Scott Mayerowitz of the aviation blog ThePointsGuy.com told NBC News. “There are a lot of people out there who are very happy with that, and I think that’s what we risk losing, is that super-low-cost option.”

Of course, all this is predicated on the assumption that government regulators approve the deal.

JetBlue and American Airlines are currently being sued by the U.S. Department of Justice and six individual states over the JetBlue-American Northeast Alliance. The Alliance is an agreement between the two carriers to combine forces in what is arguably the biggest and most lucrative flying corridor in the country, but it’s one that the DOJ says creates something of a monopoly and will lead to increase airfares in northeast markets.

That was a huge concern for Spirit CEO Ted Christie, who lobbied hard for the merger of his airline with Frontier for that reason until Spirit shareholders were apparently wowed by JetBlue’s offer that came in at $1 billion more than Frontier.

But aviation expert Henry Harteveldt, president of the travel consultancy Atmosphere Research, told NBC News he believes the DOJ would demand, and receive, concessions from JetBlue prior to the approval process.

“What makes me feel better about this merger is that JetBlue already has a strong value proposition,” Harteveldt said.

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