A bunch of progressive lawmakers desires federal officers to scrutinize the proposed merger of Spirit Airlines and Frontier Airlines over issues that the mixture could show anti-competitive and hurt clients and staff.
The lawmakers — together with Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont and Representative Alexandria Ocasio-Cortez of New York — warn that the merger could drive up ticket costs, worsen customer support and cut back employee leverage. They laid out these misgivings in a letter on Wednesday to Transportation Secretary Pete Buttigieg and Assistant Attorney General Jonathan Kanter, the highest antitrust official within the Justice Department.
“For decades, the airline industry has been plagued by increasing consolidation, producing massive airline giants while leaving consumers and workers behind,” the lawmakers wrote. “Because the proposed Spirit-Frontier merger threatens to exacerbate these trends — including by potentially increasing prices during a period of high inflationary pressure — we urge the Department of Justice and the Department of Transportation to closely review this megamerger.”
If federal officers discover that the deal violates antitrust regulation or fails to serve the general public curiosity, they need to oppose the merger, the lawmakers stated. The letter was additionally signed by Senator Ben Ray Lujan of New Mexico and Representatives Rashida Tlaib of Michigan, Katie Porter of California, Jan Schakowsky of Illinois and Mondaire Jones of New York.
When Spirit and Frontier announced plans to merge final month, they argued that the mixture would make aviation extra aggressive. The merger would produce the nation’s fifth-largest airline by market share, enabling Spirit and Frontier to higher tackle the 4 largest airways, which management about 80 p.c of the home market, they stated.
“This is a completely different deal than any other airline transaction you’ve looked at in the past and, for that reason, we think it’s very pro-competition, very pro-consumer,” Spirit’s chief government, Ted Christie, stated in an interview with The New York Times on the day the merger was introduced.
But the group of lawmakers disagreed with that characterization, arguing within the letter that “a closer look at how competition actually works in the airline industry quickly reveals the emptiness of these claims.”
Customers have rather a lot to lose within the merger, they stated.
For one, airline mergers have been related to larger ticket costs prior to now. And whereas the low-cost enterprise mannequin employed by Spirit and Frontier could strain different carriers to chop fares, the merger would scale back competitors amongst such funds airways. Also, if the brand new airline deserted that enterprise mannequin, the trade would “lose an important check on prices,” the lawmakers stated.
Spirit and Frontier are routinely criticized for poor buyer satisfaction. In combining, they’d dominate sure markets and may need much less incentive to handle buyer issues, the lawmakers stated. Finally, they argued, the merger could promote anti-competitive conduct among the many largest airways.
For workers of Spirit and Frontier, the deal could make it more durable to barter, the lawmakers stated. They additionally warned that the merger could result in job cuts, although Spirit and Frontier have stated there shall be no layoffs and, in reality, that they plan to rent 10,000 staff by 2026.
It isn’t clear how the Biden administration will act. Allowing the creation of a big low-cost airline could promote competitors among the many nation’s dominant carriers. But the administration has taken an aggressive stand on company consolidation, even singling out the airline trade in its plan to promote broader economic competition. In the autumn, the Justice Department sued to prevent a domestic alliance between American Airlines and JetBlue Airways, arguing that the deal would increase costs and cut back competitors.