A bunch of progressive lawmakers needs federal officers to scrutinize the proposed merger of Spirit Airways and Frontier Airways over issues that the mix may show anti-competitive and damage prospects and employees.
The lawmakers — together with Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont and Consultant Alexandria Ocasio-Cortez of New York — warn that the merger may 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 Lawyer Basic Jonathan Kanter, the highest antitrust official within the Justice Division.
“For many years, the airline business has been suffering from rising consolidation, producing large airline giants whereas leaving shoppers and employees behind,” the lawmakers wrote. “As a result of the proposed Spirit-Frontier merger threatens to exacerbate these developments — together with by doubtlessly rising costs throughout a interval of excessive inflationary stress — we urge the Division of Justice and the Division of Transportation to carefully assessment this megamerger.”
If federal officers discover that the deal violates antitrust legislation 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 introduced plans to merge final month, they argued that the mix would make aviation extra aggressive. The merger would produce the nation’s fifth-largest airline by market share, enabling Spirit and Frontier to raised tackle the 4 largest airways, which management about 80 p.c of the home market, they stated.
“It is a fully completely different deal than another airline transaction you’ve checked out previously and, for that purpose, we predict it’s very pro-competition, very pro-consumer,” Spirit’s chief govt, Ted Christie, stated in an interview with The New York Occasions on the day the merger was introduced.
However the group of lawmakers disagreed with that characterization, arguing within the letter that “a better have a look at how competitors truly works within the airline business rapidly reveals the vacancy of those claims.”
Prospects have rather a lot to lose within the merger, they stated.
For one, airline mergers have been related to larger ticket costs previously. And whereas the low-cost enterprise mannequin employed by Spirit and Frontier could stress different carriers to chop fares, the merger would cut back competitors amongst such funds airways. Additionally, if the brand new airline deserted that enterprise mannequin, the business would “lose an vital verify on costs,” 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 deal with buyer issues, the lawmakers stated. Lastly, they argued, the merger may promote anti-competitive habits among the many largest airways.
For workers of Spirit and Frontier, the deal may make it tougher to barter, the lawmakers stated. In addition they warned that the merger may result in job cuts, although Spirit and Frontier have stated there shall be no layoffs and, the truth is, that they plan to rent 10,000 employees by 2026.
It isn’t clear how the Biden administration will act. Permitting the creation of a big low-cost airline may promote competitors among the many nation’s dominant carriers. However the administration has taken an aggressive stand on company consolidation, even singling out the airline business in its plan to advertise broader financial competitors. Within the fall, the Justice Division sued to stop a home alliance between American Airways and JetBlue Airways, arguing that the deal would increase costs and cut back competitors.