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The Street
The Street
Veronika Bondarenko

Allegiant Air would benefit from the Spirit/JetBlue merger

Over the last year, the aviation world has been anxiously following the saga around a potential Spirit Airways (SAVE) -) and JetBlue (JBLU) -) merger. After an attempt to merge Spirit with the Denver-based Frontier (FRON) -) started wavering at the start of 2022, the New York-based JetBlue swept in with a $3.6 billion bid for the low-cost airline.

After some back-and-forth on which deal would be best, Spirit shareholders approved the merger in October 2022 but the U.S. Department of Justice later filed to block the merger on antitrust grounds. The lawsuit will be heard in court in October 2023 as the airlines work to win government approval for the merger.

Related: Can JetBlue Improve Spirit's Reputation?

While the biggest concerns around the merger have to do with JetBlue's plans to increase airfare with the ultra-budget airline by as much as 40% while leaving travelers with fewer competitors to choose from, there are airlines who will benefit significantly from the merger.


Allegiant offer 'aimed at removing any doubt of our commitment to competition,' JetBlue says

As it works out changes it could do to convince the Justice Department that it won't create an anti-competitive market, JetBlue agreed to sell its assets at Boston International Airport (BOS) and Newark Liberty (EWR) airports to fellow low-cost airline Allegiant (ALGT) -).

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It also promised to dedicate five gates that are currently used by Spirit at Fort Lauderdale International Airport to Allegiant.

As JetBlue CEO Robin Hayes told Reuters, while the "divestiture commitment [is] not needed to ensure the continued growth of the vibrant ultra-low-cost carrier segment, [it] is aimed at removing any doubt of our commitment to promoting competition."

“Merging with Spirit will allow us to bring our signature service and low fares to even more people and places across the country and beyond," Hayes said.

That said, a successful merger would still make JetBlue and Spirit the fifth-largest airline in the U.S. with a market share of nearly 9% of all domestic seats.

A quick timeline of the looming JetBlue/Spirit lawsuit (here's what you need to know)

Allegiant predictably welcomed the offer that it said would fall into its plans for "long-term growth" in cities currently dominated by many airlines.

"We are committed to long-term growth, especially in areas such as New York, Boston, and Florida," Allegiant Chief Revenue Officer Drew Wells said in a statement to media outlets. "This agreement will allow us to expand our service in these cities."

As it prepares to argue its case in court, JetBlue had earlier this year said that it would drop plans to pursue its separate Northeast Alliance with American Airlines (AAL) -). U.S. District Court Judge Leo Sorokin had ordered the airlines to split up over similar concerns that the partnership "substantially diminishes competition in the domestic market for air travel." 

While JetBlue had initially talked of plans to similarly fight this decision in court, it announced that it would drop all efforts to do this by July 2023 as it focuses to continue vying for the Spirit merger although Hayes told Reuters that the earlier decision was "entirely moot" when it comes to anything regarding the looming lawsuit.

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