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The Last Major Airline Deal?

 |  April 8, 2022

By: Andrew Ross Sorkin, Jason Karaian, Vivian Giang, Stephen Gandel, Lauren Hirsch, Ephrat Livni and Anna Schaverien (NY Times Dealbook)

A fight is brewing over the future of the budget carrier Spirit Airlines that could give rise to a credible competitor to the industry’s “Big Four.”

In February, Frontier Airlines and Spirit announced plans to merge, promising to create a national budget airline that would help keep fares low. But this week, JetBlue Airways swooped in with a $3.6 billion all-cash bid for Spirit, a significantly higher offer than Frontier’s cash-and-stock deal. Late yesterday, Spirit said it would start talks with JetBlue to assess the merits of its bid.

Either offer will attract close regulatory scrutiny. They will also test the way that trustbusters review deals, as officials increasingly consider more than just market share, The Times’s Niraj Chokshi and DealBook’s Lauren Hirsch report.

The deal is the latest example of a bidding war in which antitrust scrutiny plays a leading role. Frontier’s bid for Spirit is lower than JetBlue’s, but Frontier argues that its deal offers more regulatory certainty, given that JetBlue is bigger and focuses on higher-priced fares. This is a sign of the times — see the fight over the Kansas City Southern railroad — as policymakers focus on the impact of deals on economic inequality, inflation and wages.

“Both deals present a new challenge to antitrust agencies,” said Paul Denis, who represented US Airways in its merger with American Airlines, and previously worked at the Justice Department. A review of any deal involving Spirit would explore whether there is a “unique rivalry” among lower-cost carriers. After waves of consolidation among larger legacy airlines, American, Delta, United and Southwest have a combined 66 percent share of the U.S. market. Frontier-Spirit would control 8 percent, while JetBlue-Spirit would account for 10 percent…