As JetBlue prepares to begin its takeover of Spirit Airlines in a $3.8 billion deal, many are wondering what the future holds for airlines and their loyal customers.
The JetBlue-Spirit deal is still subject to a shareholder vote and regulatory approval, which could prove difficult if federal officials believe the deal would reduce competition and raise fares. Spirit is known for its barebones and deep discount 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. “Airline competition is the biggest determinant of how many cheap flights you see on a given route.”
Keyes said Spirit is an “anchor” in the airfare market and its low fares tend to drive down ticket prices offered by major carriers.
“Your Delta fares, your US fares are actually cheaper if they’re on a route where they’re competing with Spirit, because they have to lower 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 disrupt the industry to drive down the fares of the big four airlines.
While experts say Spirit’s shareholder vote should pass, JetBlue is expected to face regulatory hurdles.
“[The Department of Justice] will try to model what will happen with one less airline. What will this do for route structure, load factors, capacity and fares,” Ravi Sarathy, professor of international business and strategy at the D’Amore-McKim School of Business from Northeastern University. “And they will also try to model whether it will improve overall air quality and flight service quality.”
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 staff of pilots – both in high demand as airlines grapple with continued pilot shortages and delayed aircraft deliveries. due to supply chain disruptions.
“The question will be whether Spirit passengers want better service or are they really more concerned with the lowest possible flight cost?” Sarah said. “That remains to be seen.”
JetBlue offers stretch seats on some transcontinental routes and to London, while Spirit does not have a First Class/Business Class cabin. JetBlue also offers complimentary in-seat entertainment and snacks; Spirit does not have onboard televisions or free food. It is unclear how the two airlines would merge their products if a merger were approved.
Spirit shareholders are expected to vote next month on the merger. If this vote passes, a review by the federal government could take months or even years.
ABC News’ Sam Sweeney contributed to this report.