Nonstop to Nowhere: Spirit, JetBlue, and the Limits of Merger Doctrine
Spirit Airlines built its brand on the promise that flying could be miserable, but cheap. Its reported shutdown and liquidation now poses a less cheerful question for antitrust: What if the competitor regulators fought to preserve was already running out of runway?
That question has triggered the sort of debate that is easy to politicize and much harder to analyze carefully.
Within hours of Spirit ceasing operations, critics of the Biden administration’s antitrust policy cast the episode as a simple morality play: regulators blocked JetBlue’s acquisition of Spirit in the name of competition, Spirit then failed, therefore antitrust killed Spirit.
Defenders of the merger challenge answered with an equally tidy narrative. Spirit, they argued, was already in deep trouble—hamstrung by Pratt & Whitney engine groundings, mounting debt, soft demand, and rising fuel costs. In the words of Sen. Elizabeth Warren (D-Mass.): “Spiking fuel prices from Trump’s war was the nail in the coffin for twice-bankrupted Spirit airline.” On that account, antitrust policy had little to do with the carrier’s demise.
Both stories contain some truth. Neither is fully satisfying.
It would be too easy—and almost certainly wrong—to say the U.S. Justice Department (DOJ) killed Spirit. The airline’s collapse was overdetermined. A Pratt & Whitney engine-inspection crisis grounded large portions of its fleet. The Big Four legacy carriers steadily cannibalized Spirit’s niche with their own basic-economy offerings. Fuel prices surged in the wake of the Iran war. Management’s attempt to reposition Spirit as a more premium carrier also failed to gain traction.
Still, it would be equally wrong to treat the merger challenge as irrelevant. The DOJ and the court should have taken more seriously the possibility that Spirit’s independence was, at best, precarious. That points to the more important question: whether merger doctrine, as currently applied, can adequately handle cases where the target firm is visibly distressed and where the realistic alternative to acquisition is not continued independent competition, but gradual attrition, restructuring, or outright exit from the market.