Spirit-Frontier merger could hurt airline competition, lawmakers say

A group of progressive lawmakers wants federal officials to review the proposed merger of Spirit Airlines and Frontier Airlines, fearing...

A group of progressive lawmakers wants federal officials to review the proposed merger of Spirit Airlines and Frontier Airlines, fearing the combination could prove anti-competitive and hurt customers and workers.

Lawmakers — including Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont and Rep. Alexandria Ocasio-Cortez of New York — warn the merger could drive up ticket prices, deteriorate customer service and reduce worker influence. They laid out those doubts in a letter Wednesday to Transportation Secretary Pete Buttigieg and Assistant Attorney General Jonathan Kanter, the Justice Department’s top antitrust official.

“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 potentially raising prices during a time of high inflationary pressure – we urge the Department of Justice and the Department of Transportation to take a close look at this mega-merger. .”

If federal officials find the deal violates antitrust law or doesn’t serve the public interest, they should oppose the merger, lawmakers said. The letter was also 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 its intention to merge last month they argued that the combination would make aviation more competitive. The merger would produce the country’s fifth-largest airline by market share, allowing Spirit and Frontier to better compete against the four largest airlines, which control about 80% of the domestic market, they said.

“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-competitive, very pro-consumer,” the manager said. Spirit General Ted Christie in a statement. interview with The New York Times on the day the merger was announced.

But the group of lawmakers disagreed with that characterization, saying in the letter that “a closer look at how competition actually works in the airline industry quickly reveals the emptiness of these assertions.”

Customers have a lot to lose in the merger, they said.

For one thing, airline mergers have been associated with higher ticket prices in the past. And while the low-cost business model used by Spirit and Frontier may pressure other carriers to lower fares, the merger would reduce competition between these low-cost airlines. Moreover, if the new airline abandoned this business model, the industry “would lose significant control over pricing”, the lawmakers said.

Spirit and Frontier are regularly criticized for low customer satisfaction. By combining, they would dominate certain markets and may have less incentive to address customer concerns, lawmakers said. Finally, they argued, the merger could foster anti-competitive behavior among the largest airlines.

For Spirit and Frontier employees, the deal could make bargaining more difficult, lawmakers said. They also warned that the merger could lead to job cuts, although Spirit and Frontier said there would be no layoffs and, in fact, they planned to hire 10,000 workers by 2026.

It is unclear how the Biden administration will act. Allowing the creation of a major low-cost airline could foster competition among the country’s dominant carriers. But the administration took an aggressive stance on corporate consolidation, even pointing to the airline industry in its plan to promote broader economic competition. In the fall, the Department of Justice prosecuted to prevent a national alliance between American Airlines and JetBlue Airways, arguing that the deal would raise prices and reduce competition.

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Newsrust - US Top News: Spirit-Frontier merger could hurt airline competition, lawmakers say
Spirit-Frontier merger could hurt airline competition, lawmakers say
Newsrust - US Top News
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