Spirit Airlines might soon opt for liquidation if they are not bought out or bailed out — and the Biden administration’s opposition to its proposed merger with JetBlue may be largely to blame, one economist explained to The Daily Wire.
A federal judge ultimately dealt the death blow to the plan to have the two airlines combine, but the ruling ultimately stemmed from a 2023 lawsuit filed by the Biden-era DOJ and a handful of states. The lawsuit arguably played a key role in the airline’s demise, as Spirit now struggles to get out of bankruptcy and risks becoming a ghost of aviation’s past.
“Today’s decision by JetBlue is yet another victory for the Justice Department’s work on behalf of American consumers,” then-Attorney General Merrick Garland stated at the time.
“The Justice Department proved in court that a merger between JetBlue and Spirit would have caused tens of millions of travelers to face higher fares and fewer choices. We will continue to vigorously enforce the nation’s antitrust laws,” he added.
Peter St. Onge, an economist at The Heritage Foundation, told The Daily Wire that the blocked merger — along with high taxation and rising jet-fuel prices due to the ongoing conflict in Iran — have led to the airline’s woes.
“The main thing that drove them over the edge was blocking the JetBlue merger. On the day that it was denied, their stock fell 47%. And the big picture here is that the low-cost carriers can’t pass anything on, right? They have razor-thin margins, like 2 or 3%. So they need scale in order to survive,” he said.
“The Department of Justice argued that Spirit was useful because it was keeping fares low, but of course, the reason it was keeping fares low was because of that razor-thin margin. And the only way to sustain that was to get scale. So effectively the Department of Justice killed the golden goose because it was golden,” he added.
St. Onge noted that an increase in regulations under Biden added increased difficulty.
“The legacy carriers were able to pass that on. The low-cost carriers, they couldn’t pass it on,” he said.
President Donald Trump told CNBC’s “Squawk Box” on Tuesday that he wants to see that airline get purchased, saying “Spirit’s in trouble” and suggesting that “maybe the federal government should help that one out.”
“I don’t mind mergers. I think I’d love somebody to buy Spirit, it’s 14,000 jobs,” he said.
However, he cautioned against a floated merger between American Airlines and United Airlines, as American Airlines denied a Reuters report over the possibility, according to The Motley Fool.
“But with American, it’s doing fine, and United is doing very well […] I don’t like having them merge,” Trump added.
St. Onge noted that “United and American traditionally would be an absolute no-go for antitrust” due to their much larger size, noting that Trump may view Spirit as a “special case” because of their strong emphasis on “low-cost fares” for Americans who otherwise could not afford to fly.
Last week, the Department of Transportation told The Daily Wire on background that “when Joe Biden and Pete Buttigieg blocked a proposed Spirit/JetBlue merger in 2024, their DOJ bragged it was ‘a victory for U.S. travelers who deserve lower prices and better choices.’”
“If American consumers were faced with one fewer ultra low cost carriers, they would obviously disagree,” the department added, noting that DOT is “monitoring the situation.”
Spirit Airlines did not respond to a request for comment. The airline told CNBC last week that it does not “comment on market rumors and speculation.”
