Warren, Jones, Senate and House Colleagues to Biden Admin: Proposed Frontier and Spirit Airlines Merger Could Reduce Airline Industry Competition, Hurt Consumers and Workers
The airline industry is highly concentrated: “Before the deregulation of the industry in 1978, more than 400 airlines offered flights to millions of consumers in the United States. Today, four airlines—American, Southwest, Delta, and United—control 80% of the domestic market”
“Consistent with the Biden Administration’s commitment to promoting competition and protecting consumers and workers, the DOJ and DOT should thoroughly review the proposed Spirit-Frontier merger and oppose this mega-merger if it violates antitrust law or is inconsistent with the public interest…”
Washington, D.C. - United States Senator Elizabeth Warren (D-Mass.) and Representative Mondaire Jones (D-N.Y.), along with Senators Ben Ray Luján (D-N.M.) and Bernie Sanders (I-Vt.), and Representatives Rashida Tlaib (D-Mich.), Katie Porter (D-Calif.), Jan Schakowsky (D-Ill.), and Alexandria Ocasio-Cortez (D-N.Y.) sent a letter to Jonathan Kanter, Assistant Attorney General for the Antitrust Division in the U.S. Department of Justice (DOJ), and Pete Buttigieg, U.S. Secretary of Transportation, expressing concerns about Frontier Airline’s proposed acquisition of Spirit Airlines. On February 7, 2022, Frontier Airlines announced its intent to acquire Spirit Airlines, a $6.6 billion deal that would create the nation’s fifth-largest airline if approved. In the letter, the lawmakers warn that the proposed merger could further increase concentration in the airline industry after decades of anti-competitive mergers which have reduced competition and hurt consumers. They also highlight President Biden’s commitment to addressing anticompetitive behavior in the airline industry.
“For decades, the airline industry has been plagued by increasing consolidation, producing massive airline giants while leaving consumers and workers behind. 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 (DOJ) and the Department of Transportation (DOT) to closely review this mega merger for potential violations of the Clayton Act and for concerns under 49 U.S.C. § 41105 and to oppose it if you determine it will threaten competition in the airline industry or ‘the public interest,’” said the lawmakers.
Last September, the DOJ stated that the airline industry is “an already highly concentrated industry.” Before the deregulation of the industry in 1978, more than 400 airlines offered flights to millions of consumers in the United States. Today, four airlines—American, Southwest, Delta, and United—control 80% of the domestic market, cementing their dominance through recent mergers including Delta-Northwest in 2008, United-Continental in 2010, and American-US Airways in 2013.
The lawmakers note that there are serious risks that a Spirit-Frontier combination would further concentrate and even monopolize the ultra-low-cost carrier (ULCC) segment of the industry, rather than create a fifth competitor to the “Big Four.” ULCCs operate on a different business model, and Spirit and Frontier are the two largest ULCCs by far. A merger between the two would result in a company that is four times larger than the nearest ULCC competitor.
In addition, the proposed merger could lead to higher prices and lower quality for consumers, and lower wages for workers. Studies have drawn links between reduced competition in the airline industry and higher fares for consumers. For instance, the 2010 United-Continental merger led to fare increases as high as 57% for key routes. Spirit and Frontier have ranked in the bottom two spots for customer satisfaction annually since 2017. Allowing the two carriers to merge could further insulate them from the concerns of their customers, leaving mistreated ULCC travelers with no alternatives. This merger could also impact workers. Pilots, flight attendants, and other workers in the airline industry would lose an alternative employer, and Spirit-Frontier would face less competitive pressure to offer better compensation and labor conditions to their employees.
Senator Warren has been urging the Biden Administration to closely scrutinize potential anti-competitive mergers in diverse industries. In the past year, Senator Warren has sent letters about the proposed mergers of Sanderson-Wayne, WarnerMedia-Discovery, and Amazon-MGM.
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