The Justice Department sued to block the merger in March of last year, arguing that the merger would reduce competition and ultimately drive up fares.
The airlines, on the other hand, have argued that the merger, which would have made the fifth-largest airline in the country, would allow them to better compete with larger airlines such as United and Delta.
U.S. District Court Judge William Young, who made the decision, argued in his decision that “JetBlue plans to convert Spirit’s planes to the JetBlue layout and charge JetBlue’s higher average fares to its customers.” Young continued by noting that the higher average fares would harm customers who rely on Spirit’s exceptionally low-cost flights.
“If JetBlue were permitted to gobble up Spirit—at least, as proposed—it would eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline,” Young wrote in his decision. “Worse yet, the merger would likely incentivize JetBlue further to abandon its roots as a maverick, low-cost carrier.”
In a joint statement, JetBlue and Spirit told Fast Company: “We disagree with the U.S. District Court’s ruling. We continue to believe that our combination is the best opportunity to increase much-needed competition and choice by bringing low fares and great service to more customers in more markets while enhancing our ability to compete with the dominant U.S. carriers.”
The statement went on to say that “JetBlue’s termination of the Northeast Alliance and commitment to significant divestitures have removed any reasonable anti-competitive concerns that the Department of Justice raised. We are reviewing the court’s decision and are evaluating our next steps as part of the legal process.”
The two companies can, and likely will, appeal the decision. The current merger agreement between the two companies expires in July of this year.
Shares of Spirit dropped 60% shortly following the announcement while shares of JetBlue gained 8%.