As JetBlue prepares to acquire Spirit Airlines in a deal worth $3.8 billion, many are wondering what the future holds for both airlines and their loyal customers.
The JetBlue Spirit agreement is awaiting a shareholder vote and regulatory approval, which could prove difficult if federal officials believe the agreement would reduce competition and increase tariffs. Spirit is known for its barebones and heavily discounted fares, while JetBlue is more of a full-service airline.
“I think this is bad news for travelers,” Scott Keyes, founder of Scott’s Cheap Flights, said in an interview with ABC News. “Competition between airlines is the most important factor in how many low cost flights you see on a given route.”
According to Keyes, Spirit is an “anchor” in the airfare market, and its low fares tend to drive down ticket prices on major airlines.
“Their Delta fares, their American fares are actually cheaper when they’re on a route where they compete with Spirit because they have to drop those fares to try to compete and get more customers,” Keyes said .
JetBlue CEO Robin Hayes said the acquisition could be a “solution to the lack of competition” in the US airline industry, saying in a press release: “Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to cut airfares the big four airlines.”
While experts say the Spirit shareholder vote should pass, JetBlue is expected to face regulatory hurdles.
“[The Department of Justice] try to model what will happen with an airline less. How does that affect route structure, load factors, capacity and fares,” Ravi Sarathy, professor of international business and strategy at Northeastern University’s D’Amore-McKim School of Business, told ABC News. “And they will also try to model whether this will improve overall air quality and the quality of flight service.”
Sarathy said the merger could help improve JetBlue’s product. With the $3.8 billion purchase, JetBlue would also gain Spirit’s Airbus fleet and pilot staff — both in high demand as airlines grapple with ongoing pilot shortages and delayed plane deliveries due to supply chain disruptions.
“The question will be, do Spirit passengers want better service or are they really more concerned about the lowest possible cost of flight?” Sarathy said. “That remains to be seen.”
JetBlue offers lie-flat seating on some transcontinental routes and to London, while Spirit does not have a first/business class cabin. JetBlue also offers free inflight entertainment and seatback snacks; Spirit doesn’t have onboard TVs or free food. It’s unclear how the two airlines would mix their products if a merger is approved.
Spirit shareholders are expected to vote on the merger next month. If that vote is successful, a federal government review could take months, if not years.
ABC News’ Sam Sweeney contributed to this report.