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Jet Blues

The absurd ruling this week by a federal judge blocking a proposed merger between JetBlue and Spirit Airlines is a classic example of how dangerously antiquated and anti-consumer our antitrust laws have become.

This is an ironic headline. Yes, the proposed merger truly is a “competition threat.” But a threat to the major airlines, not to air travelers. The marriage would help create a fifth major airline, reduce costs, and expand Jet Blue’s fleets and routes to compete head-to-head against the “big four”: United, Delta, Southwest, and American. Ironically, the dominant airlines are breathing a sigh of relief.

The claim by the Biden trust busters and the federal judge that the merger would restrain trade, is solidly refuted by the chart below.

The big four control two-thirds of the airline market but a merger of JetBlue and Spirit might allow these two combined airlines to grab 10%. How can a firm with one-tenth of the market be a monopoly? The claim is doubly absurd because JetBlue is a cut-rate airline that lowers airfares when it expands or moves into a market.

Regulators fear that some secondary markets like Fort Lauderdale where JetBlue and Spirit compete head-on, would see higher prices. Except without the merger, Spirit is likely to go bankrupt. Spirit’s stock price sagged on the news that the acquisition was in trouble and it is now in serious jeopardy of bankruptcy. This means that Spirit shareholders got crushed, and there will be fewer flights to bid down prices.

It’s hard to imagine a dumber antitrust case.

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