United States of America v. JetBlue Airways Corporation and Spirit Airlines, Inc., Findings of Fact and Conclusions of Law, No. 23-10511-WGY (District of Massachusetts, January 16, 2024)
Summary
In Findings of Fact and Conclusions of Law dated January 16, 2024 in Civil Action No. 23-10511-WGY, Judge William G. Young ruled that JetBlue Airways' $3.8 billion acquisition of Spirit Airlines violates Section 7 of the Clayton Act. The Department of Justice, joined by the District of Columbia, Massachusetts, California, Maryland, New Jersey, New York and North Carolina, sued to enjoin the merger, which would have combined the sixth and seventh largest U.S. airlines into the fifth largest, with 10.2% of the domestic market. After a 17-day bench trial with twenty-two witnesses and over 900 exhibits, the court found Spirit's low-price model would be exceedingly difficult for another airline to replicate and that consumers who rely on it would likely be harmed. The order permanently enjoins the defendants from executing the merger as agreed.
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Case 1:23-cv-10511-WGY Document 461 Filed 01/16/24 Page 1 of 113
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
___________________________________
)
UNITED STATES OF AMERICA, )
COMMONWEALTH OF MASSACHUSETTS, )
DISTRICT OF COLUMBIA, )
STATE OF CALIFORNIA, )
STATE OF MARYLAND, )
STATE OF NEW JERSEY, )
STATE OF NEW YORK, and )
STATE OF NORTH CAROLINA, )
)
Plaintiffs, )
)
v. ) CIVIL ACTION
) NO. 23-10511-WGY
JETBLUE AIRWAYS CORPORATION, and )
SPIRIT AIRLINES, INC., )
)
Defendants. )
___________________________________)
YOUNG, D.J. January 16, 2024
FINDINGS OF FACT AND CONCLUSIONS OF LAW
I. INTRODUCTION .............................................. 2
II. FINDINGS OF FACT .......................................... 6
A. The Industry ............................................ 6
B. The Defendants ......................................... 15
1. JetBlue ................................................ 15
2. Spirit ................................................. 20
C. The Relevant Airports .................................. 26
1. Orlando, Florida – Orlando(MCO) and Sanford(SFB) ....... 26
2. San Juan, Puerto Rico - San Juan(SJU) .................. 27
3. Miami/Fort Lauderdale – Miami(MIA) and Fort
Lauderdale(FLL) ........................................... 28
4. New York City - LaGuardia(LGA) and Newark(EWR) ......... 30
5. Boston, Massachusetts - Boston(BOS) .................... 30
D. The Merger Agreement ................................... 30
[i]
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E. The Divestitures Offered ............................... 36
1. Divestitures to Allegiant .............................. 38
2. Divestitures to Frontier ............................... 40
F. The Potential Effects of the Proposed Merger ........... 41
1. Decreased Airline Seats ................................ 41
2. Increased Concentration ................................ 43
a. “Spirit-Only” Routes ................................ 44
b. “Spirit-Entry” Routes ............................... 44
c. “Econometric” Routes ................................ 45
d. Connect Routes ...................................... 45
e. Mixed Routes ........................................ 46
f. Nonstop Overlap Routes .............................. 47
3. Increased Debt for JetBlue ............................. 49
4. Increased Prices for Customers ......................... 50
a. Loss of Spirit’s Prices as an Option for Consumers .. 50
b. Loss of Spirit’s Discipline on Other Airline’s Prices 50
G. The Experts ............................................ 53
1. Dr. Gowrisankaran ...................................... 53
2. Dr. Chipty ............................................. 55
3. Dr. Hill ............................................... 56
4. Mr. Scheff ............................................. 59
H. The Litigation ......................................... 61
III. CONCLUSIONS OF LAW ....................................... 62
A. The Clayton Act ........................................ 62
B. Mode of Analysis ....................................... 63
C. Market Definition ...................................... 66
1. Legal Framework ........................................ 66
2. Defining the Market .................................... 68
D. Prima Facie Case ....................................... 73
1. Presumption of Illegality .............................. 73
2. Direct Evidence of Anticompetitive Effects ............. 76
a. Elimination of Head-to-Head Competition Between JetBlue
and Spirit............................................... 76
b. Elimination of Spirit’s Competition with Other Airlines
78
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c. Elimination of Spirit’s as a Choice for Consumers ... 80
3. The Government Has Established a Prima Facie Case ...... 81
E. The Defendant Airlines’ Rebuttal ....................... 81
1. Ease of Entry .......................................... 83
a. Timely Entry ........................................ 85
b. Likely Entry ........................................ 88
c. Sufficient Entry .................................... 91
2. The Government’s Data .................................. 95
3. Pro-competitive Effects of the Proposed Acquisition .... 97
F. Additional Anticompetitive Effect ..................... 103
IV. THE INJUNCTIVE REMEDY ................................... 107
V. CONCLUSION .............................................. 108
VI. ORDER ................................................... 109
[iii]
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“[I]t's ‘tough to make predictions, especially about the
future.’” Saint Alphonsus Med. Ctr.-Nampa Inc. v. St. Luke's
Health Sys., Ltd., 778 F.3d 775, 783 (9th Cir. 2015). Perhaps
apocryphal, this statement has been attributed to New York
Yankees catcher Yogi Berra, the physicist Niels Bohr, and
others.1 The statement, however, also rings true when attempting
to predict the future of the airline industry; as a fast-moving
enterprise, with portable assets and dynamic growth cycles, the
industry’s potential responses to changes in economic conditions
are almost impossible to predict. Yet, federal antitrust law
aims to preserve the free functioning of markets and
participation of diverse competitors by attempting to do just
that: predict the future. Here, based on a robust review of
evidence presented over four weeks of trial, this Court makes
its best attempt.
There are no “bad guys” in this case. The two corporations
are -- as they are expected to -- seeking to maximize
shareholder value. The Department of Justice is -- as the law
requires -- speaking for consumers who otherwise would have no
1 As Judge Hurwitz notes in St. Alphonsus, “[t]his quotation
is not included in the definitive book of Berra quotations, see
Yogi Berra, The Yogi Book: “I Really Didn't Say Everything I
Said!” (1998), and its provenance is at best unclear, see, e.g.,
The Yale Book of Quotations 92 (Fred R. Shapiro ed., 2006)
(attributing a variant to Niels Bohr, but noting that the exact
authorship is disputed).” 778 F.3d at 783 n.7.
[1]
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voice. Their forthrightness, civility, and zealous advocacy
have immeasurably assisted the Court in reaching out for
justice.
I. INTRODUCTION
On July 28, 2022, Jet Blue Airways Corporation (“JetBlue”)
and Spirit Airlines, Inc. (“Spirit”) (collectively, the
“Defendant Airlines”) executed a final merger agreement.
JetBlue, the sixth largest airline in the United States, agreed
to pay $3.8 billion to acquire Spirit, the seventh largest
airline in the United States. The proposed merger would create
the nation’s fifth largest airline, accounting for 10.2% of the
domestic market. Immediately after the merger agreement was
signed, speculation began regarding the merger’s antitrust
implications.2
JetBlue is a so-called low-cost carrier (“LCC”), relying on
point-to-point flying using fewer types of aircraft. Spirit is
known as an “Ultra-Low-Cost Carrier” (“ULCC”), meaning that its
offerings target budget-conscious passengers with low-cost,
often unbundled flight options. The proposed merger would
See, e.g., Mary Schlangenstein & Leah Nylen, JetBlue’s
2
$3.8 Billion Spirit Deal Faces Tricky Antitrust Review,
Bloomberg News (July 29, 2022),
https://www.bnnbloomberg.ca/jetblue-s-3-8-billion-spirit-deal-
faces-tricky-antitrust-review-1.1798883.
[2]
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transfer all Spirit’s assets to JetBlue and remove Spirit from
the market.
Invoking the Clayton Act, 15 U.S.C. § 18, the United States
Department of Justice, joined by the District of Columbia, the
Commonwealth of Massachusetts, and the states of California,
Maryland, New Jersey, New York, and North Carolina (collectively
hereinafter, “the Government”), filed this action to enjoin the
Defendant Airlines from proceeding with the merger. The
resulting 17-day bench trial on the merits featured testimony by
twenty-two witnesses, over 900 exhibits, and thousands of pages
of evidence. The Court also traveled to a nearby location to
take in a view of both Defendant Airlines’ seat configurations.
The trial transcript exceeds 2,500 pages, accompanied by over
eighty binders containing exhibits presented to witnesses.
Post-trial submissions exceed 700 pages.3
The parties’ thorough presentation, as well as a careful
review of the parties’ voluminous submissions, illumines certain
key findings: The airline industry is an oligopoly that has
become more concentrated due to a series of mergers in the first
decades of the twenty-first century, with a small group of firms
in control of the vast majority of the market. See In re Dom.
3 The Court also received submissions from amici, including
the Association of Flight Attendants-CWA, Transport Workers
Union Local 570, and Travelers United. The Court is grateful
for these helpful, educational submissions.
[3]
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Airline Travel Antitrust Litig., No. MC 15-1404 (CKK), 2023 WL
5930973, at *10 (D.D.C. Sept. 12, 2023). JetBlue and Spirit are
not two of the largest airlines, though were they to merge, they
would grow in size to further compete with the larger airlines.
From the Defendant Airlines’ perspective, organic growth is
too slow, as there are too few new aircraft available to meet
industry demand. JetBlue’s inorganic growth through acquisition
of Spirit’s sizable fleet of retrofittable aircraft –- of the
same type -- largely solves this problem and is a tried-and-true
growth strategy in this industry.
A post-merger, combined firm of JetBlue and Spirit would
likely place stronger competitive pressure on the larger
airlines in the country. At the same time, however, the
consumers that rely on Spirit’s unique, low-price model would
likely be harmed. The Defendant Airlines currently compete
head-to-head throughout the country, and that competition,
particularly Spirit’s downward pressure on prices, benefits all
consumers. Spirit’s unique position in the domestic scheduled
passenger airline industry would be exceedingly difficult for
another airline, or a combination of other airlines, to
replicate, even with low barriers to entry and the dynamic
nature of the industry inasmuch as they face the same, industry-
wide aircraft sourcing issues.
[4]
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The Clayton Act was designed to prevent anticompetitive
harms for consumers by preventing mergers or acquisitions the
effect of which “may be substantially to lessen competition, or
tend to create a monopoly.” 15 U.S.C. § 18. Summing it up, if
JetBlue were permitted to gobble up Spirit -– at least as
proposed -- it would eliminate one of the airline industry’s few
primary competitors that provides unique innovation and price
discipline. It would further consolidate an oligopoly by
immediately doubling JetBlue’s stakeholder size in the industry.
Worse yet, the merger would likely incentivize JetBlue further
to abandon its roots as a maverick, low-cost carrier. While it
is understandable that JetBlue seeks inorganic growth through
acquisition of aircraft that would eliminate one of its primary
competitors, the proposed acquisition, in this Court’s attempt
to predict the future in murky times, does violence to the core
principle of antitrust law: to protect the United States’
markets –- and its market participants -- from anticompetitive
harm.
Accordingly, for the reasons below, the Court rules that
the proposed merger, as it stands, would substantially lessen
competition in violation of the Clayton Act. The July 28, 2022
proposed merger, therefore, is enjoined.
[5]
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II. FINDINGS OF FACT4
A. The Industry
The United States passenger airline industry is dominated
by four major airlines, often referred to as the “Big Four”:
Delta Airlines (“Delta”), American Airlines (“American”), United
Airlines (“United”), and Southwest Airlines (“Southwest”).
These four airlines control 80% of the industry (with the next
largest airline, Alaska Airlines, garnering 6% of airline
revenue in the United States). The Big Four have built their
strength over the past two decades through a series of mergers
and consolidations of the industry.5
The largest three carriers, Delta, United, and American are
what the industry refers to as “legacy carriers” (or “network
carriers”), having been in operation prior to the 1978
deregulation of the airline industry. See In re Dom. Airline
Travel Antitrust Litig., 2023 WL 5930973, at *5 (describing
legacy carriers as “airlines that existed prior to the Airline
Deregulation Act of 1978[] in the United States domestic airline
industry[,] includ[ing] . . . American, Delta, and United . . .
4 The findings of fact are largely taken from the parties’
respective proposed findings of fact; citations and quotations
are omitted for readability.
5 For example, between 2001 and 2013, Delta absorbed
Northwest Airlines; United absorbed Continental Airlines;
American merged with TWA, America West, and U.S. Airways; and
Southwest bought Air-Tran Airways.
[6]
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.”). These legacy carriers utilize global networks based upon a
“hub-and-spoke” model, concentrating operations in “hub” cities
in order to then offer travelers connecting flights to numerous
domestic and international destinations. Legacy carriers offer
multiple classes of service (basic economy, economy, premium
economy, business class, first class, etc.) and a broad range of
amenities to cater to as many different types of travelers as
possible. Legacy carriers have wide-ranging membership,
frequent-flyer, and loyalty programs, with connected credit card
and travel partners, in order to attract and retain customers.
These programs alone are worth billions of dollars. Legacy
carriers also often hold contracts with large businesses
throughout the country to ensure their business travel needs are
covered.
Southwest, though a member of the Big Four, is not a legacy
carrier. Instead, it is commonly referred to as a “low-cost
carrier” (“LCC”). Other LCCs include New Pacific Airlines and
JetBlue.6 A low-cost carrier is able to offer lower fares than
its competitors by keeping its operating costs lower, typically
through the use of fewer types of aircraft (enabling labor,
maintenance, training, and other cost efficiencies), operating
Alaska Airlines has sometimes been referred to as a low-
6
cost carrier. See infra p. 8 (discussion of Alaska Airline’s
offerings).
[7]
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out of less-costly airports, and through the use of a smaller
point-to-point network. A point-to-point network is
characterized by flying a greater proportion of passengers on
nonstop rather than connecting itineraries. With lower overall
operating costs, low-cost carriers are also sometimes able to
offer more or better quality amenities; JetBlue, for instance,
offers free Wi-Fi for all customers, seatback entertainment in
all seats, and free, name-brand refreshment offerings for all
customers to enjoy.
Some airlines, such as Alaska Airlines and Hawaiian
Airlines,7 operate as hybrids of the low-cost model and the
legacy model (commonly referred to as “hybrid carriers”).
JetBlue has, at times, also been referred to as a hybrid
carrier, though it views itself as a “maverick” and “uniquely
disruptive” low-cost carrier. Tr. 11/6/23 (Robin Hayes) 124:23
– 125:1-4; 126:11-15. Hybrid carriers often operate a hub-and-
spoke network at the regional level and are thereby able to keep
costs down while offering the level of service generally
7 On December 3, 2023, Alaska Airlines and Hawaiian Airlines
announced their agreement to combine, with Alaska Airlines to
acquire Hawaiian Airlines. As per their agreement, both
airlines would continue to operate as separate brands. The
merger agreement is valued at approximately $1,900,000,000. See
Niraj Chokshi & Ivan Penn, Alaska Airlines Plans to Buy Hawaiian
Airlines, N.Y. Times (Dec. 3, 2023),
https://www.nytimes.com/2023/12/03/business/alaska-airlines-
hawaiian-airlines-deal.html.
[8]
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attributed to the legacies. For example, Alaska Airlines and
Hawaiian Airlines both have a “first-class” product, and JetBlue
has, in certain markets, a “Mint” product, comparable to a
first-class product.
ULCCs include Spirit, Frontier Airlines (“Frontier”),8
Allegiant Air (“Allegiant”),9 Avelo Airlines (“Avelo”),10 Breeze
8 Frontier has approximately a 2% market share of domestic
airline travel. It currently has bases in Orlando International
(“Orlando (MCO)”), Harry Reid International Airport (“Las Vegas
(LAS)”), Denver International Airport (“Denver (DEN)”), Dallas-
Fort Worth International Airport (“Dallas (DFW)”), Phoenix Sky
Harbor International Airport (“Phoenix (PHX)”), Tampa
International Airport (“Tampa (TPA)”), Hartsfield-Jackson
Atlanta International Airport (“Atlanta (ATL)”), Philadelphia
International Airport (“Philadelphia (PHL)”) and Miami
International Airport (“Miami (MIA)”). For ease of reference,
the three letter Federal Aviation Administration (“FAA”)
location identifier codes of airports are included throughout.
See Encodes/Decodes, FAA,
https://www.faa.gov/air_traffic/flight_info/aeronav/aero_data/lo
c_id_search/Encodes_Decodes/ (last visited Dec. 29, 2023).
Frontier’s current fleet comprises 134 planes, and as of
September 30, 2023, it had an order book of 214 planes.
Frontier is the lowest cost -- as in, it has the lowest
operating cost -- airline in the United States. Frontier’s CEO
estimated it would take Frontier five to eight years to replace
Spirit and operate its existing schedule based on its current
plan of 15-20 percent annual growth. This estimate does not,
however, include maintaining Frontier’s pre-existing growth plan
in addition to serving Spirit’s routes.
9 Allegiant has a revenue share approximately between 1% and
2%. Allegiant serves the third-highest number of destinations
(125) out of any U.S. airline and serves close to 600 unique
routes based on its network diversification strategy. Allegiant
also competes in metropolitan regions by providing service to
secondary airports that compete with primary airports in the
same area. Allegiant currently has 127 aircraft in its fleet
and estimates having 230 aircraft by 2029.
10 In 2021, Avelo operated 3 planes; now, only two years
later, it operates 16 airplanes and 68 routes. Avelo has “all
[9]
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Airways (“Breeze”),11 and Sun Country Airlines (“Sun Country”).12
ULCCs make up a small fraction of the market overall, with
approximately 7% of total revenue attributable to ULCCs. ULCCs
tend to offer travelers even lower fares than low-cost carriers
by lowering their cost structures further (often through the use
of a single type of aircraft), offering simplified onboard
experiences, and removing some features traditionally included
in the price of an airline ticket. A passenger on an ULCC might
pay extra to check or even carry-on a bag, access Wi-Fi in the
air, receive basic refreshments (food or drink) on the plane, or
to receive additional legroom. These types of basic fares, with
add-on costs for additional amenities, are referred to as
“unbundled fares.”13 Like LCCs, ULCCs generally operate point-
of the regulatory approvals and designations it needs to fly
commercially internationally” and “could support flights, for
instance, to Mexico or the Caribbean.” Tr. 11/3/23 (Trevor
Yealy/Avelo) 38:25–39:20.
11 Breeze Airways operated its first flight on May 27, 2021,
with a fleet of eight aircraft. Since then, Breeze has grown
rapidly, and as of September 6, 2022, had a fleet of 21 aircraft
and 150 routes. As of September 6, 2022, Breeze had plans to
add the following aircraft to its fleet: 12 in 2023, 18 in 2024,
18 in 2025, and 10 in 2026.
12 Sun Country’s aircraft are almost entirely based out of
Minneapolis-St. Paul International Airport (“Minneapolis
(MSP)”); over 70% of its routes include MSP in the city pair.
13 Spirit recognizes that one way this unbundled fare
structure generates revenue is through these ancillary
amenities; Spirit estimates that two-thirds of Spirit’s
customers purchase at least one. Approximately half of Spirit’s
revenue in 2022 came from ancillary amenities (as opposed to the
fare for travel).
[10]
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to-point networks, and ULCCs are often characterized by high
seat density (number of seats on a plane) and high utilization
(how many flights a plane might make per day). ULCCs are the
fastest growing segment of the domestic airline industry. In
attempting to compete with ULCCs, other airlines (legacies,
LCCs, and hybrid carriers) have introduced unbundled fare
options, known as “basic economy.”
The different airline types generally cater to different
types of customers. While airlines tend to categorize customers
as “leisure” and “business” travelers (some leisure customers
are even further categorized as “visiting friends and relatives”
(“VFR”)), customers exist on a “continuum” and there are no
“firm boundaries” around customer segments. Thus, even within
the “business” and “leisure” categories, consumer preferences
Such offerings bring to mind the classic farce “Master of
the House,” from the musical Les Miserables:
Reasonable charges
Plus some little extras on the side!
Charge 'em for the lice
Extra for the mice
Two percent for looking in the mirror twice
Here a little slice
There a little cut
Three percent for sleeping with the window shut
When it comes to fixing prices
There are a lot of tricks he knows
How it all increases
All those bits and pieces
Jesus! It's amazing how it grows!
Les Miserables, Lyrics by Herbet Kretzmer.
[11]
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differ. For example, some business customers -- i.e., people
traveling for work or corporate clients -- are cost-conscious,
particularly if traveling on behalf of a small business or for
self-employment.
The legacy carriers segment their onboard offerings in
order to cater to as many different types of customers as
possible, offering fares ranging from a lower-end basic economy
product to premium products like business class or first class,
while also offering a traditional main cabin ticket. JetBlue
similarly offers a segmented product, with five fare classes.
ULCCs, in comparison, target cost-conscious, often leisure and
VFR customers, with their unbundled, less differentiated
product. A carrier’s network plan is designed with its target
consumer in mind; a ULCC might focus more on leisure
destinations like Orlando, Florida, while a legacy carrier or
even a LCC will have a more expansive network to cater to a
broader range of consumers.
Since the COVID-19 pandemic, demand for leisure travel has
increased. Accordingly, airlines have continued to shift
capacity to leisure markets following the COVID-19 pandemic. As
a dynamic industry, airlines are constantly responding to
consumer demand and frequently shift route plans based on which
[12]
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they believe will be the most profitable.14 Entry onto a route
is rapid.15 Once a carrier decides to enter a route, it can do
so within two weeks or up to six months, depending on whether it
already has a presence at an endpoint (one of the airports on
the route).
Multiple industry-wide problems are constraining the growth
of individual airlines. First, airlines are experiencing
significant delays in delivery of aircraft from manufacturers
following the pandemic.16 Airbus, the manufacturer for both
Spirit and JetBlue, is facing significant delivery delays and
14 “[E]ach carrier has significant turnover in its route
structure from year to year.” Tr. 11/27/23 (Nicholas Hill)
15:12–16:3. In 2023, Spirit, for example, entered and exited
approximately 33% of its 2022 route network structure.
Legacies, LCCs, and ULCCs have entered a significant number of
routes in 2023. In 2023 alone, the “aggregate total number of
routes entered [by all carriers] is going to be somewhere
between 300 or 400 routes.” Tr. 11/27/23 (Nicholas Hill) 15:1–
7. Other ULCCs also had a high percentage of entries and exits
in 2023 as compared to their 2022 networks: Breeze, Avelo, Sun
Country, and Frontier entered and exited 110%, 81%, 45%, and 38%
of their 2022 route networks, respectively. Tr. Ex. 886.
Legacies entered and exited between 8% and 11% of their 2022
route networks this year. Id.
15 “Route” refers to a one-way, scheduled airline passenger
service origin and destination (“O&D”) pair. For instance, a
direct flight from Boston, Massachusetts to San Diego,
California is a “route.”
16 The recent grounding of all Boeing 737 Max 9 planes by
the FAA, in response to an emergency landing on Friday, January
5th, 2024, is likely to exacerbate aircraft shortages. See
Christopher F. Schuetze, Keith Bradsher & Melissa Eddy, What to
Know About Boeing’s 737 Max 9 and the Alaska Airlines Grounding,
N.Y. Times (Jan. 8, 2024),
https://www.nytimes.com/2024/01/06/business/alaska-airlines-
boeing-737-max-9.html.
[13]
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does not expect to allow airlines to add to their order books
prior to 2029.17 Engine issues have resulted in smaller growth
plans for multiple Airbus customers in the industry including
JetBlue, Hawaiian Airlines, Frontier, and Spirit. Second, and
similarly, engine issues have also forced airlines, including
Spirit, to prematurely and temporarily ground aircraft in their
fleets to accommodate inspections. JetBlue expects its number
of temporarily grounded aircraft to increase in 2024.
Third, the Federal Aviation Administration (“FAA”) is
facing a dire shortage of Air Traffic Controllers.18 During the
COVID-19 pandemic, many of the FAA’s experienced Air Traffic
Controllers retired. As air travel demand rebounded, Air
Traffic Control (“ATC”) centers could not keep up with the
increased flying capacity across the country. As a result, ATC
centers have struggled to support scheduled air traffic, at
17 Airbus’ delays stem mostly from engine problems. Pratt &
Whitney, the manufacturer of the engines for the Airbus new
engine option aircraft (“NEO”), has had engine issues since
2016. In July 2023, Pratt & Whitney announced that the geared
turbo engine fans (“GTFs”) of the NEOs had new problems
requiring accelerated engine inspections. Specifically, one
issue concerns contaminated powdered metal, which required
planes to be pulled prematurely from the schedule for
maintenance. The powdered-metal issue requires almost 300 days
of maintenance per plane, as Pratt & Whitney has to remove
engines for X-rays and reassembly.
18 See, e.g., Emily Steel & Sydney Ember, Drunk and Asleep
on the Job: Air Traffic Controllers Pushed to the Brink, N.Y.
Times (Dec. 3, 2023),
https://www.nytimes.com/2023/12/02/business/air-traffic-
controllers-safety.html.
[14]
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times forcing airlines to limit the number of flights operating
certain routes to/from affected airports.
Finally, pilot staffing issues have recently artificially
constrained airlines’ growth. As with ATC, during the COVID-19
pandemic, many legacy airline pilots retired; as demand bounced
back, legacy airlines scrambled to hire pilots, including
recruiting pilots from competing airlines. This pilot shortage
caused pilot attrition issues for Spirit and other airlines in
2022, which persisted until at least the first half of 2023. In
late 2022 and the first half of 2023, pilot attrition was
described by Spirit executives as one of, if not the “main
driver[s]” of constraints Spirit faced to increasing its
utilization.
B. The Defendants
The Defendant Airlines in this litigation, JetBlue and
Spirit, are two of the fastest growing airlines in the nation.
JetBlue is the sixth largest airline by revenue in the United
States, with an approximately 5% market share based on revenue.
Spirit is the seventh largest airline in the United States as
measured by available seat miles, with an approximately 4%
market share based upon revenue.
1. JetBlue
JetBlue primarily serves the East Coast, with 93% of its
routes touching at least one of its six focus cities: New York,
[15]
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Boston, Miami/Fort Lauderdale,19 Orlando, Los Angeles, and San
Juan. JetBlue’s focus cities differ from the hubs of legacy
carriers by catering primarily to travel by the local population
of the city as opposed to connecting customers. As of December
31, 2022, JetBlue served 108 cities in 32 states, the District
of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin
Islands, and 24 countries in the Caribbean and Latin America,
Canada, and Europe. Fifty percent of JetBlue’s routes touch New
York, where JetBlue is only the fourth largest carrier on a
revenue basis (following Delta, American, and United). At
Boston Logan International Airport (“Boston(BOS)”), JetBlue and
Delta are the two largest airlines by total passengers carried;
at Fort Lauderdale(FLL), JetBlue and Spirit are the two largest
airlines by passengers carried.
JetBlue was founded in 1998 and commenced operations in
2000 with the mission to “bring humanity back to air travel.”
Airlines often refer to a metropolitan area as one city
19
for the purposes of network planning because customers in those
markets have the choice to fly out of more than one airport.
For instance, the Miami/Fort Lauderdale “market” includes
flights departing from both Miami(MIA) and flights departing
from Fort Lauderdale (FLL). Other common examples include the
New York City metropolitan area, where customers could choose to
fly out of LaGuardia Airport (“LaGuardia(LGA)”), Newark Liberty
International Airport (“Newark(EWR)”), and John F. Kennedy
International Airport (“New York (JFK)”), and the Orlando
metropolitan area, where customers could choose to fly out of
either Orlando(MCO) or Orlando Sanford International Airport
(“Sanford (SFB)”).
[16]
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Tr. Ex. 612 at 1226–27. JetBlue has implemented innovative
cost-saving strategies that help enable it to profit without
increases in fares. JetBlue prides itself as a “maverick” and
“unique disruptor” in the airline industry, often taking an
aggressive approach to competing with legacy and other low-cost
carriers. When JetBlue enters a market, fares tend to decrease,
and when JetBlue exits a market, fares tend to increase. This
pro-consumer phenomenon is known as the “JetBlue Effect,” a term
coined by an academic study from the Massachusetts Institute of
Technology. Because the JetBlue Effect forces other airlines to
lower their fares, air travelers do not need to be JetBlue
customers to benefit from the JetBlue Effect.
Despite its lower cost base and lower fares, JetBlue offers
the most legroom in coach, with a seat pitch (the space between
rows of seats, generally referred to as legroom by passengers)
of at least 32 inches, and, in some of its airplanes, it offers
the widest seat in coach. JetBlue is the only domestic airline
offering seatback entertainment on every seat, including up to
100 channels of free live TV, and a library of recorded video
media, available for all customers free of charge. JetBlue was
the first airline to provide free high-speed Wi-Fi on its
domestic flights and is still the only U.S. airline offering
free high-speed Wi-Fi across its entire fleet. Finally, JetBlue
[17]
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offers all its customers free, unlimited brand-name snacks and
soft drinks.
JetBlue’s business model has evolved over time and
continues to evolve today. It originally offered a coach-only
product, but by 2014 was offering the first domestic lie-flat
business class product, called “Mint”. Since 2014, JetBlue has
expanded Mint to international routes. During November 2019,
JetBlue also adjusted its offerings to introduce an unbundled
product called “Blue Basic,” which unbundles the JetBlue base
fare from other ancillary items, to better compete with Spirit’s
and other ULCCs’ standard products as well as with legacy
airlines’ basic economy products.20 In total, JetBlue offers
five classes of service: an unbundled, basic economy seat (“Blue
Basic”), a main cabin seat (“Blue”), a main cabin seat with
priority security and boarding (“Blue Extra”), an “Even More
Space” option (with, as the name suggests, an increased seat
pitch for even more space), and Mint, its premium offering.
Blue Basic is available on all JetBlue flights.
As of December 31, 2022, JetBlue had a fleet of 290
aircraft, consisting of 230 Airbus and 60 Embraer aircraft.
20Not surprisingly, the same customers that fly ULCCs,
including Spirit, tend to purchase Blue Basic fares. An
analysis of average income data shows that customers purchasing
Blue Basic fares (JetBlue’s unbundled, lowest fare offering) and
Spirit fares have similar average annual incomes.
[18]
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Without the merger, JetBlue will have approximately 335 aircraft
in 2027, but with the merger, JetBlue would have 600 aircraft in
2027. JetBlue asserts that in order to increase its relevance
and scale, and therefore compete with larger airlines, it must
merge with another airline.21
Since 2015, JetBlue has sought a merger transaction to grow
its scale and better compete with the Big Four carriers. It
first unsuccessfully sought to acquire Virgin America in 2015
and 2016. In 2017, JetBlue again considered a potential
acquisition transaction, this time focusing on Spirit and one
other airline as potential candidates. As part of its
exploration of a potential transaction in 2017, JetBlue spent
roughly two to three weeks investigating the potential synergies
that could be generated through a transaction with either of the
two carriers. JetBlue ultimately did not pursue a transaction
with Spirit in 2017, primarily because it determined that it
could not afford to purchase Spirit in light of its then-current
share price and the expected premium to be paid based on Alaska
Airlines’ acquisition of Virgin America.
JetBlue, however, was undeterred, and again considered
acquiring Spirit as soon as late 2019. JetBlue viewed Spirit as
JetBlue Chief Executive Officer Robin Hayes testified
21
that Jetblue would “never get to the size that [the legacies]
are based on organic growth.” Tr. 11/6/23 (Robin Hayes/JetBlue)
85:14–18.
[19]
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an ideal target because of its fleet and engine commonality,
which would allow for cost savings and efficient operations.
Ultimately, in February 2020, JetBlue’s Board of Directors
authorized its CEO, Robin Hayes, to approach Spirit about a
potential merger. However, the COVID-19 pandemic intervened,
and no approach was made.
2. Spirit
Spirit is the largest ULCC in the United States in terms of
both seat capacity, measured in available seat miles (“ASMs”)
and number of aircraft.22 Spirit has grown faster on a
percentage basis than legacy carriers and low-cost carriers, and
is among the fastest growing ULCCs. Today, Spirit accounts for
about 46% of domestic ULCC capacity (as measured in ASMs) and
Spirit accounts for 71% of domestic ULCC capacity on the routes
it serves. As of year-end 2022, Spirit “served 92 destinations
in 16 countries throughout the United States, Latin America[,]
and the Caribbean.” Spirit “offers low-fare service across the
lower 48 [states of the United States] and Latin America.”
Christie (Spirit) Lit. Dep. 6/6/2023, 17:20-22. Spirit’s network
is primarily comprised of routes in the Eastern half of the
22Capacity in the airline industry is generally measured in
terms of “available seat miles,” or “ASMs.” One ASM is one seat
on one plane flying one mile. Thus, an airline can increase its
ASMs by operating more planes, offering more seats, or flying
longer routes.
[20]
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United States, but Spirit is working toward becoming “a more
national carrier” by serving cities in the West. Tr. 11/7/23
(John Kirby/Spirit) 130:12-25. Spirit’s three largest cities,
called “core” cities, are Fort Lauderdale, Florida; Orlando,
Florida; and Las Vegas, Nevada -- all major leisure
destinations. In addition, Spirit identifies Los Angeles,
California and the metropolitan area of New York City, New York
(“New York City”) as part of its growing network “foundation.”
Spirit’s “objective is to deliver low fares so that more
people have the ability to travel,” and Spirit “strive[s] to be
recognized by [its] guests and potential guests as the low-fare
leader in the markets [it] serves.” Christie (Spirit) Dep.
6/6/23, 18:5-6,; Tr. Ex. 39 at 447. Specifically, Spirit’s 2022
10-K explains that Spirit focuses on “price-sensitive
travelers,” for whom Spirit’s “low fares and unbundled service
offering” are particularly appealing. Tr. Ex. 39 at 448.
Spirit’s “business model allows [Spirit] to compete principally
by offering customers unbundled base fares that remove
components traditionally included in the price of an airline
ticket.” Id. at 444.
Spirit is known as an innovator in the airline industry,
both in terms of pioneering the ULCC business model (Spirit was
the first airline to introduce unbundled fares to the United
States) and through its innovation in technology (Spirit was the
[21]
Case 1:23-cv-10511-WGY Document 461 Filed 01/16/24 Page 25 of 113
first domestic airline to introduce self-check baggage and
handicap-accessible lavatories on most aircraft).
When deciding where to fly, Spirit -- like other airlines -
- primarily seeks profitability. One consideration in deciding
where to fly is the extent to which Spirit can stimulate demand
in the marketplace by offering lower fares -- the so-called
“Spirit Effect.”23 When deciding which new routes to enter,
Spirit typically looks to enter high-fare markets with fares
that are lower than the pre-Spirit average fare to stimulate or
increase passenger demand. Increased passenger demand can mean
either “more travelers or more frequent travelers” on not just
Spirit flights on a route, but across all carriers flying that
route. Tr. 10/31/23 (Edward Christie/Spirit) 103:22-25; 104 1-
8. Spirit has found that, typically, once Spirit enters a
route, passenger demand increases and the average fare on that
route decreases.
The Spirit Effect on a route does not always lead to a
profit for Spirit. Sometimes to stimulate demand, Spirit has to
lower fares to an unsustainable level, causing Spirit to exit
that route. Like all airlines, Spirit makes changes to its
network “constantly.” Tr. 11/8/23 (John Kirby/Spirit) 52:21–
The Spirit Effect is similar to the JetBlue Effect. Much
23
of this litigation, in fact, centered on whether the JetBlue
Effect is as strong as the Spirit Effect.
[22]
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53:1. Spirit can add routes to its network in as little as five
weeks (or three months if it is not already present in at least
one of the airports in the origin-destination pair).
Spirit’s unbundled model means the base price of an airline
ticket is separate from the price of additional items. These
additional items, called “ancillaries,” include things like
checked and carry-on bags, advance seat assignments, priority
boarding, and refreshments. Customers can also pay for an
ancillary titled the “Big Front Seat”, Spirit’s front-of-cabin,
larger seating most similar to the domestic first-class seat
product on legacy airlines.24
Spirit typically has higher aircraft -- and gate --
utilization rates than its competitors. Spirit operates its
aircraft for more hours each day (13.7 hours on average),
allowing the airline to attain more ASMs out of a single
aircraft. Spirit’s predominately point-to-point network helps
Spirit increase the daily use of its aircraft as Spirit’s planes
do not have to wait for connecting flights, as with a hub
network. Spirit also lowers its costs by highly utilizing its
gates; Spirit strives to turn a higher number of airplanes per
Though the seats are larger, “Big Front Seat”
24
accommodation does not include the added amenities common in a
first class cabin, such as free premium refreshments and
tailored service. By foregoing such amenities, Spirit lowers
costs further.
[23]
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day per gate than “an average airline.” Tr. 10/31/23 (Edward
Christie/Spirit) 88:16-23. Spirit’s current goal is to operate
eight flights per day, per gate at the airports it serves.
Spirit, therefore, strongly prefers to enter an airport using a
preferential gate versus a common-use gate, in order to have
more flexibility and control over gate use.25 Spirit’s
utilization is also increased by operating higher-density
aircraft; its narrower seat pitch allows for more seats, and
therefore more customers, per aircraft.
As of December 31, 2022, Spirit operated a fleet of 194
Airbus aircraft. Between 2010 and 2023, Spirit’s ASMs grew 6-
fold. Such growth has slowed, however, and Spirit does not
expect its historic ASM growth rate to continue in the near
future.
Spirit has not been profitable since 2019, resulting in a
cumulative net loss of close to $2,000,000,000 since the onset
of the COVID-19 pandemic. The causes for Spirit’s decline in
financial outlook are complex, as various risks materialized,
while opportunities did not. First, since the COVID-19
pandemic, as the increase in demand for leisure capacity has
Preferential gates are typically leased by an airport to
25
a specific carrier, which is then free to use the gates as
desired, provided the carrier does not underutilize the gate.
In contrast, common-use gates are not exclusive to a given
carrier and can be used by any airline.
[24]
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grown, so has the increase in competition for leisure travelers
from other airlines. Second, Spirit’s financial outlook has
been impacted significantly by issues with Pratt & Whitney’s NEO
engines. At the beginning of 2023, Spirit had to ground three
of its 200-or-so aircraft; today, Spirit has twelve grounded
aircraft. The issues with Pratt & Whitney’s engines uniquely
affect Spirit: Spirit is the largest operator of the impacted
GTF-powered Pratt & Whitney NEO engines in the United States.
Other challenges that have affected Spirit’s profitability have
included disruptions flowing from understaffing at air traffic
control centers in Jacksonville, Florida, and increased costs of
pilots and flight attendants.
As a result of these cumulative operational and financial
challenges, Spirit has already taken steps to slow its growth,
exit routes, and revise its business plans. Spirit currently
has no prediction as to when it will return to profitability.
In pre-pandemic years, Spirit tended to exit one or two dozen
routes per year. By contrast, Spirit exited 70 routes in 2022,
and 40 routes in the first half of 2023, representing more than
20% of its network. Spirit also does not plan to enter the
routes or cities it hoped to enter as recently as mid-2023. As
a result of its financial difficulties, Spirit recently
renegotiated its contract for aircraft deliveries with Airbus,
Spirit’s manufacturer, to grow at a slower pace.
[25]
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Spirit began to explore the idea of merging with another
airline as early as 2016. Over the years, it has considered
Frontier, Sun Country, Viva Colombia, Allegiant, and JetBlue as
potential merger partners. Spirit has consistently considered a
merger to be advantageous because it does not believe it could
achieve competitive significance by independent growth alone.
C. The Relevant Airports
The airports that Spirit flies from most frequently are
Fort Lauderdale(FLL); Orlando, Florida (Orlando(MCO)); Las
Vegas(LNV); Los Angeles(LAX); the New York City, New York
metropolitan area (including LGA and EWR); and San Juan, Puerto
Rico (San Juan(SJU)). On the 73 nonstop routes on which JetBlue
and Spirit currently overlap, the most common cities to fly out
of are Miami/Fort Lauderdale, Orlando, San Juan, Boston, and New
York City.
1. Orlando, Florida – Orlando(MCO) and Sanford(SFB)
There are two airports in the greater Orlando area:
Orlando(MCO) and Sanford(SFB). Sanford(SFB), a secondary
airport to Orlando(MCO), is located approximately thirty to
forty-five minutes away by ground transportation from MCO and
about thirty to forty-five minutes away from the theme parks in
Orlando. Orlando(MCO) is a competitive and fragmented market;
no airline has a more than 21% share, and approximately seven
airlines are at or above a 10% share. Orlando(MCO) is not slot
[26]
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or gate constrained.26 It recently opened a new terminal and is
in the process of constructing even more gates.
Low-cost carriers like Spirit, Frontier, Avianca, WestJet,
Volaris, Norse, Lynx, Swoop and Avelo have increased passenger
service volumes at Orlando(MCO) in the last few years. Avelo,
for example, operates a “base” in Orlando(MCO), meaning that it
parks its aircraft and employs essential personnel at the
airport. Frontier also has a base at Orlando(MCO). Frontier
has a 14% revenue share in Orlando(MCO) and operates at least 44
routes out of Orlando(MCO). As of June 2023, Frontier served
more destinations than any other airline at Orlando(MCO).
Breeze initiated service at Orlando(MCO) in 2022, flying just
one route, and in 2023 flies nine routes. Allegiant flies out
of Sanford(SFB) and recently announced that it would be offering
service to and from Orlando(MCO).
2. San Juan, Puerto Rico - San Juan(SJU)
In San Juan, Puerto Rico, there are no constraints on entry
at Luis Muñoz Marin International Airport(SJU). San Juan is a
fragmented and competitive market; six competitors have a
26“Slots” are specific day and time authorizations during
which certain airports and the FAA grant permission to an
airline to take off or land a flight. Slots can be sold or
leased by the carriers holding the rights to them. It is
possible to operate to some extent at an airport without
obtaining slots, but only during limited (and often unappealing)
time periods.
[27]
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roughly 10% share. Several ULCCs have entered or expanded their
presence in San Juan in recent years. Frontier, for instance,
has had “no issues growing in San Juan.” Tr. 11/14/23 (Barry
Biffle/Frontier) 97:18–24. Indeed, Frontier has made San Juan a
focus city, offering 15 routes to and from the metro area --
more than any other airline. Avelo currently flies from two
destinations to San Juan, Puerto Rico and is evaluating
opportunities to expand the routes it flies to San Juan.
Allegiant previously operated routes out of Puerto Rico and
would consider returning to Puerto Rico if it were to become
profitable.
3. Miami/Fort Lauderdale – Miami(MIA) and Fort
Lauderdale(FLL)
There are two major airports in the greater Miami/Fort
Lauderdale area (referred to as “South Florida” throughout
trial): Miami(MIA) and Fort Lauderdale(FLL). Miami(MIA) is not
constrained and has an ongoing construction project that, when
completed, will allow for “11 gates’ worth of growth potential.”
Tr. 11/8/23 (John Kirby/Spirit) 96:8–13.
At Fort Lauderdale(FLL), there are minimal constraints for
new entrants. Broward County Aviation Department (“BCAD”), the
controlling airport authority at FLL, has a plan (“Master Plan”)
to expand the airport. The Master Plan includes the addition of
29 gates -- for a total of 95 gates -- over the course of a
[28]
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number of years, to ensure the airport can accommodate future
demand. Fort Lauderdale(FLL) currently has enough gates to meet
demand, but demand is projected to increase past beyond the
airport’s current capacity of 66 gates. Phase 1 of the Master
Plan will add 11 gates. The initial part of Phase 1 is to add
Terminal 5, and it is already underway. Since 2016, BCAD has
been able to accommodate every new entrant carrier that has
requested access to FLL.
BCAD regularly solicits ULCCs to begin or expand service at
FLL, with five domestic LCCs or ULCCs currently providing
service at the airport. Indeed, Frontier’s “largest operation,”
with well over “80 routes collectively,” is in Florida,
approximately 19 of which fly from Miami(MIA) or Fort
Lauderdale(FLL). See Tr. 11/14/23 (Barry Biffle/Frontier)
97:13–17, 98:24–99:4. Allegiant also has established operations
at Fort Lauderdale(FLL), operating three gates at the airport.
Fort Lauderdale(FLL) has also been able to accommodate the
entrance of four new international carriers, El Al from Israel,
Flair from Canada, Porter Airlines from Canada, and Bermuda Air
from Bermuda.
BCAD’s lease agreements include a “use-it-or-lose-it”
provision that allows BCAD to recapture preferential-use gates
if “the airline[] is not meeting the stated demand or the
utilization of that particular gate.” Tr. 11/15/23 (Mark
[29]
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Gale/BCAD) 76:4–12. This policy is applied on an aggregate, not
route-by-route level: if a carrier “has 10 preferential-use
gates and after [BCAD] run[s] the formula at the year end and
they only qualify for 9, [BCAD] would look to recapture one of
those gates, and . . . , because of their shifting of their
international traffic, [BCAD] would look to, more likely than
not, recapture one of the international-capable gates.” Id. at
77:20–78:8. Accordingly, the minimum use requirement operates
to remove barriers on capacity by ensuring turnover of
underutilized gates to other airlines -- unlike at other
airports, carriers flying out of Fort Lauderdale(FLL) cannot
take a loss of revenue in order to keep control of their gates.
4. New York City - LaGuardia(LGA) and Newark(EWR)
Both LaGuardia and Newark are slot- and gate-constrained
airports.
5. Boston, Massachusetts - Boston(BOS)
While Boston(BOS) has some infrastructure constraints,
Spirit has been able to grow and secure additional gates. Other
ULCCs, such as Allegiant and Sun Country, have similarly
“tak[en] advantage of common use capacity to grow in Boston.”
Tr. 11/8/23 (John Kirby/Spirit) 97:2–3.
D. The Merger Agreement
In the summer of 2021, Spirit’s and Frontier’s respective
management teams became involved in negotiations which
[30]
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culminated in a merger agreement signed on February 5, 2022, and
publicly announced on February 7, 2022. Spirit’s Board of
Directors and Chief Executive Officer, Ted Christie, supported
the proposed transaction with Frontier in February 2022. After
learning about Frontier’s bid to acquire Spirit, JetBlue CEO
Robin Hayes had discussions with JetBlue’s Board of Directors,
as well as Mr. Christie, about making a competing bid for
Spirit.
On March 29, 2022, JetBlue submitted a proposal to acquire
Spirit, offering Spirit shareholders a cash bid of $33 per
share, amounting to $3,600,000,000. JetBlue indicated in its
March 29, 2022, offer letter a willingness to agree to a reverse
break-up fee payable to Spirit if an acquisition by JetBlue were
not consummated for antitrust reasons, but JetBlue did not
propose a dollar figure for that fee. In April 2022, Spirit
conveyed to JetBlue that it was concerned that JetBlue’s
Northeast Alliance with American Airlines could impede the
regulatory process for a potential merger between JetBlue and
Spirit, and requested additional protections for Spirit
shareholders including a reverse termination fee. Toward the
end of April 2022, before Spirit publicly responded to the March
29 offer, JetBlue sent Spirit a revised acquisition offer. This
revised offer included a reverse break-up fee of $200,000,000,
representing the amount JetBlue would pay Spirit’s shareholders
[31]
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if the contemplated deal ultimately did not pass regulatory
scrutiny.
Spirit first determined that it was “reasonably likely that
[JetBlue’s offer] could lead to a superior proposal” to
Frontier’s offer, and with the assistance of Barclays and Morgan
Stanley as financial advisors, Spirit began evaluating JetBlue’s
proposed acquisition. Tr. 10/31/23 (Edward Christie/Spirit)
118:8–119:7. On May 2, 2022, however, Spirit’s Board of
Directors unanimously rejected JetBlue’s revised proposal to
purchase Spirit for $33 per share. On that same day, Spirit
issued a press release attaching a letter from Mr. Christie and
H. McIntyre Gardner, the Chairman of Spirit’s Board, to Mr.
Hayes, setting forth Spirit’s concerns about a JetBlue
acquisition of Spirit. Shortly thereafter, on May 5, 2022,
Spirit held an earnings call and filed with the SEC a related
presentation titled “Rejected Proposal from JetBlue Is Illusory
and Not Superior”.
On May 16, 2022, JetBlue responded to the Spirit Board of
Directors’ rejection of its proposal by going directly to
Spirit’s shareholders with a tender offer to buy outstanding
Spirit shares. Spirit’s Board continued to oppose an
acquisition by JetBlue and to support the proposed transaction
with Frontier.
[32]
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Throughout June 2022, JetBlue made a series of revised
offers to acquire Spirit, with increases in per-share price,
increases in the reverse termination fee, and commitments to
divestitures. Spirit continued to resist, citing continued
concerns about the anticompetitive nature of such an
acquisition. On June 6, 2022, Mr. Christie received an email
from Mr. Hayes with an attached new, revised offer for Spirit
Airlines. On June 27, 2022, JetBlue made a further amended
offer to purchase Spirit; the Spirit Board did not view this
amended offer as better and did not accept it. Instead, Spirit
issued another press release on June 28, 2022, reaffirming its
commitment to the transaction with Frontier and noting that the
“[l]atest offer from JetBlue does nothing to address our Board’s
serious concerns that a combination with [JetBlue] would not
receive regulatory approval.” Tr. Ex. 93 at 998.
As late as July 12, 2022, Spirit’s Board was still
unanimously in favor of the Frontier-Spirit transaction.
Nevertheless, seeing the direction its shareholders were likely
to vote, Spirit chose to resume negotiations with JetBlue on a
potential acquisition of Spirit,27 and on July 27, 2022, Spirit
27In light of Spirit management’s desire for additional
information on the nature of the proposed divestitures, JetBlue
and Spirit engaged in discussions with respect to regulatory
matters, and Spirit’s management eventually became comfortable
that it “did in fact have a significant covenant” and that it
[33]
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and Frontier terminated their merger agreement. This was done
before Spirit shareholders could participate in a much-delayed
final vote on the deal. By then, however, it was clear Spirit
shareholders would not vote in favor of the Frontier-Spirit
agreement.
On July 28, 2022, JetBlue and Spirit entered into the
merger agreement at issue here (“merger agreement” or
“acquisition agreement”). The final per-share price JetBlue
agreed to pay for Spirit represented a more than 50-percent
premium over the trading price of Spirit’s shares just before
the Frontier bid. The proposed merger cost totals approximately
$3,800,000,000. JetBlue will pay Spirit’s shareholders $33.50
per share in cash.
If the proposed acquisition is not consummated by or before
December 2023, the amount JetBlue will pay Spirit shareholders
will increase over time to an ultimate $34.15 per share, so long
as the proposed acquisition is consummated by July 24, 2024. At
the time of the trial, Spirit shareholders had already received
a $2.50-per-share prepayment in cash upon their approval of the
proposed acquisition. Since January 2023, Spirit shareholders
“had satisfied [Spirit’s] concerns with regard to the regulatory
matters.” Tr. 11/1/23 (Edward Christie/Spirit) 81:6–82:22.
[34]
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have also received payment in the form of a $0.10-per-month
ticking fee, which will continue until closing.28
The acquisition agreement contains a combined reverse
break-up fee (a combination of both the fee paid to Spirit and
to its shareholders) of $470,000,000. The reverse break-up fee
compensates Spirit shareholders if the proposed acquisition is
not consummated for antitrust reasons. The acquisition
agreement includes a retention program, which uses monetary
awards to incentivize Spirit management to remain at the company
through the course of the transaction-review process. The
retention program covers senior executives as well as other
persons deemed critical to the management team. Mr. Christie
expects to receive over $1,000,000 in additional payments
through the retention program if he remains employed at Spirit
through the closing of the proposed acquisition. Other Spirit
28A “ticking fee” is an “increase in the per-share cash
consideration payable to seller stockholders as the time period
between signing and closing passes certain milestones. Classic
ticking fees are flexible devices that can be tailored to the
specific circumstances at hand—for example, the increase can
start at signing, at a later specified date or upon the
occurrence (or non-occurrence) of a specified event. Similarly,
the amount can go up on a straight line basis over the course of
the relevant period or can be structured to fluctuate over time
as certain dead-lines are passed or events occur.” Daniel Wolf,
Time is Money-Ticking Fees, Harvard L. Sch. F. on Corp.
Governance (Oct. 18, 2013),
https://corpgov.law.harvard.edu/2013/10/18/time-is-money-
ticking-fees/.
[35]
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executives also have bonus agreements through the retention
program, including many who testified at trial.
E. The Divestitures Offered
Divestitures have historically been used in airline
industry mergers to address competitive concerns raised by the
Government. JetBlue itself has been the beneficiary of prior
DOJ-mandated divestitures. For instance, when American and U.S.
Airways merged, JetBlue acquired a number of slot pairs at
Ronald Reagan International Airport (“Reagan(DCA)”) that allowed
it to expand its service to Washington, D.C. JetBlue also
acquired slots at LaGuardia(LGA) as a result of a slot swap by
Delta and U.S. Airways. In order to attempt to obtain
regulatory approval for the proposed merger here, JetBlue has
agreed with Spirit to make robust divestitures. Under its
agreement with Spirit, JetBlue is required to divest assets of
JetBlue and Spirit up to a material adverse effect on the
potential combined JetBlue and Spirit airline.
In addition to this broad commitment, JetBlue specifically
agreed to certain proactive divestiture commitments (the
“Divestiture Agreements”) of select assets in Boston, the New
York metropolitan area, and Fort Lauderdale. Frontier, another
ULCC, agreed to acquire Spirit’s 22 slots, 6 gates, and the
associated ground facilities at LaGuardia(LGA). Allegiant, yet
another ULCC, agreed to acquire (1) Spirit’s 2 gates and the
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associated ground facilities at Boston(BOS); (2) Spirit’s 43
runway authorizations, 2 gates, and the associated ground
facilities at Newark(EWR);29 and, (3) 5 of JetBlue’s gates and
the associated ground facilities at Fort Lauderdale(FLL).
The transfer of the divestiture assets is subject to
approval by the local airport authorities. Historically, these
authorities have approved divestitures associated with airline
mergers and other transactions; such approval, however, has not
yet been obtained and is not guaranteed. For Fort
Lauderdale(FLL), in particular, the BCAD, the actual owner of
the gates, will not consent to JetBlue’s request to transfer or
sublease the gates to Allegiant, per BCAD’s current policy and
agreement with the FAA. Rather, under both BCAD’s Competition
Plan and agreement with the FAA, after JetBlue relinquishes the
gates and other FLL assets to BCAD, the availability of the
gates will be advertised for any interested airline “so that
other potential airlines that might have an interest in serving
[Fort Lauderdale(FLL)] would be aware of those gates.” Tr.
11/15/23 (Mark Gale/BCAD) 58:2–10. Mark Gale, the CEO and
Director of Aviation at BCAD, acknowledged that the gates could
29Runway authorizations are a specific type of takeoff and
landing control, similar to a slot, that is used at Newark(EWR)
to limit the amount of aircraft flying in and out of the airport
at any specific time of day.
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be awarded to a legacy carrier such as American, Delta, or
United, instead of Allegiant or another ULCC.
The Divestiture Agreements do not include a commitment to
replace Spirit’s capacity on all routes that it would stop
serving should the merger be consummated, nor does it require
Frontier or Allegiant to maintain a particular level of service
from the divestiture airports.30 The Divestiture Agreements also
only pertain to airport-level assets; through the agreements,
Allegiant and Frontier are not provided with, for example,
additional aircraft or pilots to use on their new routes.
1. Divestitures to Allegiant
As just stated, under the Divestiture Agreements Allegiant
would acquire (1) Spirit’s 2 gates and the associated ground
facilities at Boston(BOS); (2) Spirit’s 43 runway
authorizations, 2 gates, and the associated ground facilities at
Newark(EWR); and (3) 5 of JetBlue’s gates and the associated
ground facilities at Fort Lauderdale(FLL). With the divestiture
assets at Fort Lauderdale(FLL), Allegiant would more than double
its presence at the airport. At Newark(EWR), the runway
authorizations, in particular, would provide Allegiant with the
30Each airline executive questioned about this possibility
bristled at such an idea; for a divestiture agreement to require
an airline only to utilize certain routes or timelines would be
deeply out of pace with the fast-changing dynamics of the
industry.
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ability not only to access a highly constrained airport, but
also expand its presence on preferred flight times. Finally,
Allegiant’s divestiture acquisitions at Boston(BOS) would
provide the airline with gates it has previously failed to
obtain.
Allegiant, as a planned recipient of some divestitures, has
acknowledged that it may not be able to use all of the
divestitures to their fullest capacity, particularly right away.
First, Allegiant might not be able to use all of the runway
authorizations it is attempting to acquire at Newark because
some of “the earliest time slots are a challenge” for Allegiant,
which does not currently have aircraft or crew based in Newark.
(Drew Wells/Allegiant) Tr. 11/14/23 145-12-19. Second,
Allegiant does not currently fly internationally or to Puerto
Rico. Spirit currently serves international destinations out of
Fort Lauderdale(FLL) and serves destinations in Puerto Rico out
of Fort Lauderdale(FLL), Newark(EWR), and Boston(BOS).
Allegiant’s business model is not, as of now, equipped to
replace these routes, but it plans to add international service
and has an “application out to do so” through a joint venture
with VivaAerobus in Mexico. Tr. 11/14/23 (Drew Wells/Allegiant)
134:19–135:8. Allegiant currently “believe[s it] can be selling
within probably 30 days with about a 3-month window to begin
operations” in international markets. Tr. 11/15/23 (Drew
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Wells/Allegiant) 24:12–22. Finally, Allegiant’s business model
generally focuses on unserved or underserved markets, with less
overlap with other airlines, unlike Spirit, which competes
directly on routes with legacy airlines and low-cost carriers.
2. Divestitures to Frontier
Frontier and JetBlue have entered into a binding
divestiture agreement that provides Frontier with six gates and
22 slot-pairs at LaGuardia(LGA). These assets are “[e]xtremely
valuable,” both because of the slot constraints at
LaGuardia(LGA) and because the assets are located in the Marine
Air Terminal, which allows the recipient to “keep [its] costs
down.” Tr. 11/8/23 (John Kirby/Spirit) 101:13–102:6. Frontier
envisions using the assets to “probably first” “fill Spirit’s
former routes out of New York.” Tr. 11/14/23 (Barry
Biffle/Frontier) 104:3–7, 105:18–23. At trial, a Frontier
executive testified that the airline would not “have to pull
from existing flying” to utilize the LGA divested assets due to
Frontier’s expansive order book. Tr. 11/14/23 (Barry
Biffle/Frontier) 87:7–9 (Frontier will have “50 airplanes, brand
new airplanes delivered at the time. So [we] don’t have to pull
from existing flying to do that.”); see also id. at 96:8–14
(explaining Frontier has “the aircraft to chase” Spirit’s routes
post-merger while serving existing routes).
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Concerns also exist, however, regarding Frontier’s ability
to use its proposed divestitures at LaGuardia(LGA) to their full
potential. Spirit flies more frequently than Frontier, on
average, with two to three more average flights per day in New
York City alone.
F. The Potential Effects of the Proposed Merger
1. Decreased Airline Seats
As the proposed merger stands, JetBlue would acquire, and
thereby eliminate, Spirit from the market. Although Spirit’s
yellow aircraft livery would not immediately be repainted as
JetBlue planes, at the moment the merger is consummated, Spirit
and JetBlue would no longer be competitors. Instead, JetBlue
would have the ability and incentive to reconfigure Spirit
pricing and network planning to support JetBlue’s profitability.
At trial, JetBlue executives testified that “nothing is going to
change on Day 1,” but rather the Defendant Airlines would still
“be operating as two separate entities.” Tr. 11/17/23 (Ursula
Hurley/JetBlue) 14:15–20. That might be true for the customer
experience, as airline websites and plane configurations would
not change immediately. In reality, however, Spirit pricing and
route decisions are immediately likely to shift.
As for those more obvious changes, JetBlue estimates that
the process of retrofitting Spirit aircraft to JetBlue
specifications would take between four and five years to
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complete. As the JetBlue aircraft configuration involves less
seats per plane, total seat reductions across Spirit’s fleet are
estimated to total 11%. JetBlue will not, however, begin the
retrofit process until after it obtains a Single Operating
Certificate from the FAA.31 JetBlue estimates that each aircraft
would take approximately 30-35 days to retrofit. Given the
regulatory requirements and the amount of time needed to
reconfigure the Spirit aircraft to JetBlue’s specifications,
there would not be any seat reductions until at least early
2025, with reconfigurations complete no earlier than 2029.
JetBlue argues that after the merger it will have the
ability and incentive to increase utilization of its aircraft to
offset this seat reduction. This could be done by upgauging the
Spirit aircraft,32 increasing aircraft utilization through more
flights per day, reducing seasonal changes in flight schedules,
31 A Single Operating Certificate is a mandatory safety-
related FAA regulatory clearance only received after the FAA
undergoes an in-depth examination of an airline’s operation.
This examination is designed to ensure an effective transition
of the merged entities and that one set of management personnel
is in place with operational control of the entire new
organization. See How Does That Work? The FAA’s Safety Role in
Airline Mergers, FAA,
https://www.faa.gov/sites/faa.gov/files/2022-07/Airline-Merger-
Fact-Sheet_0.pdf (last visited Dec. 29, 2023). JetBlue
estimates receiving a Single Operating Certificate 12-18 months
after the merger closes.
32 “Upgauging” is the process by which an airline increases
seats per departure by acquiring and flying larger aircraft on
domestic routes.
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and adding additional red-eye flights. Some of these changes
are likely, as JetBlue’s strategy regarding seasonality results
in more flights than Spirit’s current strategy, and it is likely
JetBlue would increase Spirit’s seasonal offerings to match
those of the JetBlue fleet. There is no credible evidence –-
rather only speculation -- that JetBlue has any plans to
implement the other options, such as increased redeye flights
and upgauging. Once the reconfiguration of Spirit’s aircraft is
complete, annual seat departures will decrease by more than
6,100,000.
2. Increased Concentration
The Defendant Airlines already have high combined market
shares in numerous markets. As measured by metropolitan area,
JetBlue and Spirit have 99 nonstop overlap routes; between 30%
and 40% of JetBlue and Spirit’s nonstop routes overlap. The
Government argues that due to the increase in concentration that
would occur should the merger be allowed, JetBlue’s market power
would increase past a “presumptively anticompetitive” threshold
on 183 passenger routes, including 51 nonstop overlap routes
that both JetBlue and Spirit serve.33 Among these 183 routes the
33A merger or an acquisition that produces certain changes
in concentration and ultimately results in concentration levels
above a certain threshold is presumed likely to enhance market
power. This threshold is measured in post-transaction “HHI”
(amount on the Herfindahl-Hirschman Index) greater than 2,500; a
transaction resulting in change of HHI greater than 200 in a
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Government identifies, the post-merger HHI would be greater than
1,500, with a change in HHI of at least 200. Overall, the
Government asserts that there are 562 routes that will suffer
harm due to the proposed transaction. These routes fall into
six categories: (1) “Spirit-only” routes, (2) “Spirit-entry”
routes, (3) “econometric” routes, (4) connect routes, (5) mixed
routes, and (6) nonstop overlap routes.
a. “Spirit-Only” Routes
The Government identifies 115 Spirit-only routes. A
Spirit-only route is a route on which “Spirit is present and
JetBlue is not,” meaning there is no current competition between
JetBlue and Spirit. Tr. 11/27/23 (Dr. Nicholas Hill) 57:23 –
58:1-7. The Government does not assert a structural presumption
on the 115 Spirit-only routes, and does not assert, nor could
it, that the merger would result in any loss of head-to-head
competition on these routes.
b. “Spirit-Entry” Routes
highly concentrated market is also considered presumptively
anticompetitive. HHI is “a commonly accepted measure of market
concentration. The HHI is calculated by squaring the market
share of each firm competing in the market and then summing the
resulting numbers. For example, for a market consisting of four
firms with shares of 30, 30, 20, and 20 percent, the HHI is
2,600 (302 + 302 + 202 + 202 = 2,600).” See Herfindahl-Hirschman
Index, U.S. Dep’t of Just., Antitrust Div.,
https://www.justice.gov/atr/herfindahl-hirschman-index (last
visited Dec. 29, 2023).
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The Government identifies 168 Spirit-entry routes; as of
November 2023, JetBlue was present on 23 of these 168. A
Spirit-entry route is “a route that Spirit planned to enter [by
2027] according to its 2027 network plan” but that is not
currently served by Spirit. Tr. (Dr. Nicholas Hill) 63:10-24.
Again, the Government does not assert a structural presumption
on the Spirit-entry routes. Given its financial condition and
other headwinds, it is highly unlikely that Spirit would be able
to enter all of the 168 routes identified in its 2027 network
plan.
c. “Econometric” Routes
The Government asserts 96 “econometric” routes, which it
defines as a nonstop overlap route on which the Government does
not assert a structural presumption but does anticipate a
significant reduction in competition. Primarily, such harm is
anticipated due to the substitution of JetBlue’s aircraft
configuration for Spirit’s aircraft configuration, not from a
loss of head-to-head competition.
d. Connect Routes
The Government also asserts 117 connect routes, which it
defines as a route on which both JetBlue and Spirit serve on a
connecting, but not nonstop, basis. JetBlue and Spirit
typically set fares for connect flights by summing the fares for
the individual nonstop legs. This method of setting fares is
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known as “sum-of-locals” pricing. On all 117 connect routes at
issue, at least half of the ticket fares are set using sum of
locals pricing; on the vast majority of the 117 connect routes
(84%), either JetBlue or Spirit prices at least 80% of their
fares using sum-of-locals pricing. Sum-of-locals pricing on
connect routes is “driven by underlying routes” and “not
primarily [] driven by competition between connect carriers or
nonstop carriers,” as that pricing structure simply adds
together fares from two otherwise unrelated nonstop routes. Tr.
11/27/23 (Dr. Nicholas Hill) 69:3–10. Many of the connect
routes are also not a competitive focus for JetBlue and Spirit
because they have low total passenger volume each year; seventy-
five of the 117 routes have fewer than 5,000 passengers a year
across all carriers. Given their predominantly sum-of-locals
pricing and low passenger volume, JetBlue and Spirit do not
meaningfully compete on the Government’s 117 connect routes, and
thus these routes are unlikely to see a substantial lessening of
competition.
e. Mixed Routes
The Government identifies 15 “mixed” routes, which it
defines as a route on which either JetBlue or Spirit provides
nonstop service while the other carrier provides connecting
service. On each of the 15 mixed routes, the connect carrier --
either JetBlue or Spirit -- serves less than 10% of total
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passengers. As explained above, when operating as the connect
carrier, JetBlue and Spirit set most fares on these routes using
sum-of-locals pricing. Accordingly, on the mixed routes where
either JetBlue or Spirit flies a connecting itinerary, the
connect carrier typically does not set its fares based on
competition with the nonstop carriers. Further, on mixed routes
for which the connect fare is significantly higher than the
nonstop fare, it is unlikely that the connect fare was set with
respect to the nonstop carriers’ fares. On these 15 mixed
routes, when Spirit is the connect carrier, a high percentage of
its passengers pay a sum-of-local fare, meaning Spirit sets the
fare based on the competition of the underlying individual
routes rather than the connect route itself. On the mixed
routes where JetBlue is the connect carrier, JetBlue “is
charging a significantly higher fare than the nonstop carrier,
which is a sign there’s unlikely to be substantial competition
[] between the connect carrier and the nonstop carrier.” Tr.
11/27/23 (Dr. Nicholas Hill) 74:7–17.
f. Nonstop Overlap Routes
Finally, the Government identifies 51 nonstop overlap
routes, which are the most potent of those it challenges. These
routes are identified as those on which both Defendant Airlines
offered nonstop service between Q3 2021 and Q2 2022. As
previously stated, the Government asserts that a structural
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presumption applies to these routes. Since Q2 2022, Spirit and
JetBlue have exited a combined 14 of the Government’s 51 nonstop
“presumption” routes (i.e., nearly 30%).34 The Government and
the Defendant Airlines agree that those routes where a Defendant
Airline has exited are no longer facing harm should the merger
occur.
Consistent with the frequency of exit, entry, and expansion
in the airline industry, many of the nonstop “presumption”
routes have experienced exit, entry, or expansion by the parties
or other carriers since Q2 2022. Thirty-five of the 51 nonstop
“presumption” routes on which the Government relies have either
been exited by at least one party or have experienced an entry
or addition in service by another carrier during or after this
time period. Both Frontier and Allegiant already operate on one
or both endpoints of all 51 nonstop overlap routes identified by
the Government, and both carriers currently serve over 20 of
these routes. In addition, 36 of the 51 nonstop presumption
routes involve an endpoint at which JetBlue has proposed
divestitures of assets. Of the 15 remaining routes that do not
involve a divestiture endpoint, four are no longer nonstop
34Spirit has exited Fort Myers-Hartford, Boston-New
Orleans, LaGuardia-San Juan, Hartford-Tampa, New York City-
Tampa, New Orleans-New York City, Austin-Cancun, Orlando-Ponce,
Orlando-Aguadilla, and Miami-Aguadilla. JetBlue has exited
Cleveland-Miami, Aruba-Miami, Cartagena-Miami, Philadelphia-San
Juan, Austin-Cancun, and Miami-St. Maarten.
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overlap routes because either Spirit or JetBlue exited in the
normal course of business. On the remaining 11 routes that do
not involve a divestiture endpoint and where exit has not
occurred -- across which Spirit only has approximately 25 total
departures per day -- there are ULCCs and LCCs that are either
already present or have substantial presence at one or both
endpoints of each of the 11 routes.
3. Increased Debt for JetBlue
Should the merger be consummated, JetBlue would also take
on significant debt. JetBlue has, historically, managed its
debt and liquidity levels very conservatively, and it
historically targeted a debt-to-capital (“debt-to-cap”) ratio of
30% to 40%. This conservatism has enabled JetBlue to borrow and
raise money and to secure better financing terms for new
aircraft acquisitions. JetBlue’s debt-to-cap ratio has
increased recently, however, rising to approximately 50% in
2022. Without the proposed merger, in 2022, JetBlue planned to
reduce its debt-to-cap ratio closer to its historical targets:
about 44% in 2023, 40% by 2024, and roughly 30% from 2025 to
2027. If the proposed acquisition is consummated, JetBlue’s
indebtedness will increase. JetBlue’s current debt-to-cap ratio
stands at 56%, and, if the proposed acquisition proceeds,
JetBlue not only plans to raise about $3,500,000,000 in debt to
fund the acquisition of Spirit but will also take on Spirit’s
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nearly $4,000,000,000 in debt. As such, should the proposed
acquisition occur, JetBlue’s post-acquisition debt-to-cap ratio
will rise to between 83% and 111%. This debt-to-cap ratio is
most similar to those of the legacy airlines.
4. Increased Prices for Customers
The proposed merger has the potential to increase prices
for customers in two ways: 1) with the elimination of Spirit
from the market, consumers would no longer have Spirit’s low
prices as an option; 2) with the elimination of Spirit from the
market, consumers would no longer benefit from Spirit’s downward
pressure on other airline’s prices.
a. Loss of Spirit’s Prices as an Option for
Consumers
As discussed above, cost-conscious travelers are the core
of Spirit’s target market, and many such travelers would not be
able to fly with higher-priced fares. JetBlue plans to convert
Spirit’s planes to the JetBlue layout and charge JetBlue’s
higher average fares to its customers. The elimination of
Spirit would harm cost-conscious travelers who rely on Spirit’s
low fares. Spirit has, since 2017, offered prices consistently
lower than JetBlue and the legacy airlines.
b. Loss of Spirit’s Discipline on Other
Airline’s Prices
As Spirit has grown over the years, it has posed an
increasingly competitive threat to JetBlue and the Big Four
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airlines, to the benefit of Spirit passengers and other
traveling consumers alike. Consumers have benefitted both
directly from Spirit’s low prices and indirectly because
Spirit’s prices place downward pressure on JetBlue’s and other
airlines’ prices. If the proposed acquisition proceeds, these
consumer benefits would not only disappear from Spirit’s
existing routes, but also not reach consumers in markets in
which Spirit planned to enter in the foreseeable future.
First, consumers will lose the benefit they had received
from head-to-head competition between Spirit and JetBlue, as
JetBlue’s prices would rise after Spirit’s removal from the
market. Many of Spirit and JetBlue’s overlap routes are to/from
Los Angeles, New York City, San Juan, and Boston, given Spirit’s
recent growth in these cities. JetBlue and Spirit’s overlaps
have also increased significantly on routes touching Florida and
Latin America. By October 2019, Spirit’s growing competitive
threat to JetBlue in markets between New York City and the
Caribbean was also “raising a red flag” within the JetBlue
Pricing Team.35 Tr. 11/1/2023 (David Clark/JetBlue) 134:15-
135:16. The aggressive response of legacy airlines to Spirit’s
low fares compounds the pressure that Spirit puts on JetBlue.
35Eventually, in late 2019, JetBlue began developing an
integrated strategy specifically to compete more effectively
with Spirit, titled the “Spirit Competitive Strategy.”
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For example, in 2019, low ULCC fares led United Airlines to take
“aggressive” action in lowering its fares to protect its
markets, such as by filing “extraordinarily low” $29 walkup
fares from Newark to Santo Domingo.36 Tr. Ex. 644 at 461; Tr.
11/1/2023 (David Clark/JetBlue) 135:22-136:1. Delta, in turn,
matched those $29 fares from JFK airport, and JetBlue, which
served the market from JFK, matched in turn and was
“unsuccessful[]” in raising those low fares. Tr. Ex. 644 at
461; Tr. 11/1/2023 (David Clark/JetBlue) 136:10-20. As a
result, JetBlue’s walkup fares were more than $100 lower than
before Spirit entered the market. Overall, JetBlue has found
that, when Spirit enters a market in which JetBlue operates,
JetBlue’s fares and revenue decrease by more than 10%. When
JetBlue lowers its fares to match Spirit’s, Spirit generally
lowers its fares even further.
Spirit’s presence –- the Spirit Effect -- also lowers other
airline’s fares. The record contains numerous examples of
Spirit undercutting and putting other pressure legacy airlines’
and other LCC’s fares. When Spirit enters a market, its rivals
reduce their prices by between 7% and 11%, on average.37
36 “Walkup fares” are fares with no advance purchase
restriction, called walkup because a customer could literally
walk up to the airline desk at the airport and buy a ticket at
this fare.
37 The Government argues that the proposed acquisition would
also increase the risk of coordination. Such coordination can
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G. The Experts
Each party presented the testimony of two experts: for the
Government, Dr. Gautam Gowrisankaran (“Dr. Gowrisankaran”) and
Dr. Tasneem Chipty (“Dr. Chipty”); and for the Defendant
Airlines, Dr. Nicholas Hill (“Dr. Hill”) and Mr. Richard Scheff
(“Mr. Scheff”). Throughout the trial, the Court carefully
observed and assessed each witness, considering their
credibility generally and as to the specific matters about which
they testified. The Court’s in-person evaluation of these
witnesses, as well as an evaluation of the substance of their
testimony and reports, influences the weight accorded to each.
1. Dr. Gowrisankaran
arise in multiple ways, including parallel accommodating
conduct, resulting from a history of observing rivals’
reactions, or implicit agreements reached through signaling or
punishments. For example, an airline can accommodate one
airline’s price increase by increasing its own prices, and if a
third airline refuses to play along, one of the coordinating
airlines can punish that airline by reducing its prices on a
separate route, undercutting the uncooperative airline. As
airline pricing is largely transparent, airlines engage with one
another across many markets, and there are only a small number
of dominant competitors, the industry is vulnerable to
coordination. The Government points to four instances of such
alleged coordination by JetBlue in 2019 and 2020 that it argues
demonstrate the airline’s willingness to coordinate with other
airlines, hurting consumers (unlike Spirit, which tends to
disrupt coordination). Such evidence is unpersuasive, however,
particularly when combined with the testimony of multiple
JetBlue pricing employees who credibly testified that such
coordinating actions were against JetBlue policy.
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The Government’s primary expert was Dr. Gowrisankaran, a
Professor of Economics at Columbia University. He received his
Ph.D. in Economics from Yale University, where his dissertation
was titled “A Dynamic Analysis of Mergers,” and specializes in
industrial organization, health and education, applied
econometrics,38 and energy economics. Dr. Gowrisankaran’s
preparation included an examination of ordinary course documents
produced by the Defendant Airlines, industry participants’
testimony, and his own analyses. Dr. Gowrisankaran provided the
market definition on which the Government bases its case. He
also analyzed the competitive effects of the merger, including
by identifying the “harmed routes” upon which the Government
relies for anticompetitive effects, though he did not take into
account the effects of any divestitures proposed by the
Defendant Airlines.39
Dr. Gowrisankaran’s testimony was thoughtful and credible,
and he was a well-credentialed witness who candidly responded to
questions from the Government, the Defendant Airlines, and the
Court. He was also methodical and articulate in explaining his
analysis and the conclusions that he drew from it. The
Defendant Airlines raise some limitations that exist in his
38 Econometrics is the application of statistical methods to
economics.
39 This analysis was left to Dr. Chipty.
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analysis and their objections are correct; Dr. Gowrisankaran
failed to 1) group airports from the same metropolitan area for
the purpose of comparing routes, 2) update his analysis to
reflect changes in Spirit’s plans since 2022, 3) evaluate
whether other carriers, particularly ULCCs, would, post-merger,
enter any routes he identified as harmed, and 4) compare prices
of the same fare class against each other (for instance,
comparing specifically an unbundled “Blue Basic” fare with a
ULCC fare). Overall, however, Dr. Gowrisankaran’s testimony was
useful to the Court in understanding the effects of the proposed
merger; the Court finds that his opinions are entitled to
significant weight.
2. Dr. Chipty
Dr. Tanseeem Chipty is the founder and managing principal
of Chipty Economics, where she provides expertise in industrial
organization, antitrust economics, and econometrics. Dr. Chipty
received her Ph.D. in Economics from the Massachusetts Institute
of Technology. Dr. Chipty examined the Defendant Airlines’
current networks and standalone growth plans, the current
networks and standalone growth plans of the divestiture buyers
and other ULCCs, JetBlue’s combined network plan for the firm
post-merger, JetBlue’s deal modeling, and the deposition
testimony of multiple industry participants. Dr. Chipty
analyzed whether entry of other airlines into the harmed routes
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would be likely, timely, and sufficient to offset the
anticipated anticompetitive effects of the merger. She also
analyzed whether JetBlue’s post-merger plans for the management
of the combined company’s assets suggest that the merger will
produce efficiencies that might enhance competition and create
benefits for consumers, thereby reversing the merger’s potential
harms.
Though Dr. Chipty is also well-credentialed, her testimony
was less thorough or methodical than that of Dr. Gowrisankaran,
and her credibility suffered accordingly. This was in large
part due to the questions the Government asked her to answer.
Much of Dr. Chipty’s testimony was a recital of evidence already
in the record and was thus notably lacking analysis. It would
be a stretch to refer to such testimony as “expert.” Instead,
her analysis was, in large part, a collection of inferences
derived from the evidence assembled for presentation to the
Court, oftentimes from JetBlue’s ordinary-course documents. Dr.
Chipty’s calculations regarding the growth other airlines would
need to exhibit in order to backfill the removal of Spirit from
the market is, however, most useful to the Court and shall be
given its due weight. The rest of her testimony lacks
evidentiary value, and therefore is entitled to no weight.
3. Dr. Hill
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Dr. Nicholas Hill is a partner with Bates White Economic
Consulting, where he provides expertise in antitrust issues. He
received his Ph.D. in Economics from Johns Hopkins University.
Dr. Hill has testified on behalf of the Department of Justice in
multiple antitrust cases, most recently in 2022.40 Dr. Hill was
the Defendant Airlines’ expert economist, and his testimony
mostly responded to that of Dr. Gowrisankaran. Dr. Hill’s
charge was to evaluate the likely competitive effects of the
merger, and he examined data and documents produced through
discovery, legal filings, deposition transcripts, industry
research, and other publicly available data.
Like Dr. Gowrisankaran, Dr. Hill was a well-credentialed,
credible, and thoughtful witness, who thoroughly and candidly
answered every question posed to him by the Government, the
Defendant Airlines, and the Court. Perhaps unsurprisingly,
unlike Dr. Gowrisankaran, Dr. Hill’s analysis focused on the
national market,41 demonstrating how the proposed acquisition
40 The Defendant Airlines were quick to highlight this fact,
likely due to the deficiencies found in other experts hired in a
previous antitrust litigation involving the airline industry,
where one of the Defendant Airlines was a party. See United
States v. American Airlines Grp. Inc., No. CV 21-11558-LTS, 2023
WL 3560430, at *23 (D. Mass. May 19, 2023) (Sorokin, J.) (“Based
on the combination of their historical ties to powerful airlines
and the manner in which they expressed their opinions from the
witness stand, the Court finds as a general matter that the
defense experts’ testimony . . . was tainted by bias.”).
41 To be clear, Dr. Hill did not propose a national market
as the relevant market upon which the Court ought analyze the
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would allow JetBlue to increase competition with the Big Four,
providing benefits to consumers. Unlike Dr. Chipty, Dr. Hill
also found through his analysis that entry by other carriers is
likely to ameliorate any anticompetitive effects, should they
occur. The Government argues that Dr. Hill’s opinions are
flawed, both because his model ignores nonstop overlap markets
in which JetBlue and Spirit currently compete and because Dr.
Hill did not do any significant quantitative analysis to
determine the ability of ULCCs to fulfill their standalone
network plans while also replacing the competition that would be
lost post-merger. Dr. Hill also did not undertake any empirical
analysis to understand how much consumers value any of the
individual JetBlue product amenities (legroom, Wi-Fi,
refreshments, seatback screens, etc.), and his model assumed
that JetBlue would continue to fly its new, post-merger acquired
aircraft on the same routes Spirit flies today. The Government
is correct that these limitations on Dr. Hill’s data exist; he
acknowledged them and was honest in his testimony about the
reasons for them. Overall, however, Dr. Hill’s testimony and
report were useful to the Court in understanding the effects of
merger; instead, he focused on the aggregate of all routes the
Government alleged harms, as well as an analysis of the
competitive effects of the merger outside of JetBlue and
Spirit’s head-to-head competition.
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this merger; the Court finds that his opinions are entitled to
significant weight.
4. Mr. Scheff
Finally, the Defendant Airlines’ second expert was Mr.
Richard Scheff. Mr. Scheff is the Managing Director at Airline
Strategy Group, Inc., a strategic global airline consulting
firm. Mr. Scheff has more than thirty years of experience in
the airline industry, working for both domestic and
international airlines. His expertise is in network planning,
fleet planning, demand forecasting, and operations research.
Mr. Scheff holds a M.S. in Industrial Engineering from the
Georgia Institute of Technology. In preparation, Mr. Scheff
reviewed both publicly available and proprietary airline data,
deposition testimony, discovery materials, and financial filings
from both JetBlue and Spirit. Mr. Scheff was retained to
evaluate whether the combined, post-merger airline is likely to
have a higher utilization than JetBlue or Spirit has on a
standalone basis, and if so, to what extent will any such
increased utilization affect the output of the combined airline,
as measured by seats available for departure.
Like Dr. Chipty, much of Mr. Scheff’s analysis and
testimony lacked credibility or usefulness for the Court. Faced
with the decrease in seats guaranteed by the proposed
reconfiguration of Spirit aircraft, Mr. Scheff attempted to
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calculate two utilization changes that he speculated the
combined airline would make, both of which might offset the harm
from the seat loss. First, Mr. Scheff calculated how increasing
Spirit’s flying patterns to match those of JetBlue’s would
increase utilization. Second, Mr. Scheff calculated how using
aircraft more efficiently, through “pooling”, would increase
utilization. Mr. Scheff did not rely on any evidence that
JetBlue plans to implement either utilization changes (though,
as stated previously, increasing Spirit’s flying patterns to
match those of JetBlue’s current fleet is more likely than
others). Mr. Scheff also suggested that the combined airline
would increase utilization by: 1) increasing route length for
larger aircraft, 2) reducing its number of operational spares,42
and 3) increasing redeye service. Again, however, Mr. Scheff
did not rely on any support for these claims. Although Mr.
42Operational spares are aircraft that airlines keep in
reserve at base airports in case there is a mechanical issue
with an aircraft currently in use. Fact witnesses did testify
that with a combined fleet, a post-merger JetBlue would have
incentive to keep less operational spares than the standalone
JetBlue and Spirit because, instead of each airline separately
keeping spares ready, the combined airline could use fewer to
support more planes. This comports with the economic principle
of economies of scale; an airline with more planes would need
less spares per plane, because the risk that multiple planes
would need spares at once is likely low, the airline can spread
that risk across more planes. Mr. Scheff’s analysis, however,
simply speculates that a decrease in operational spares would
occur; he relies on no evidence to support that contention and
provides no specificity in the number of operational spares the
combined airline would keep.
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Scheff’s analysis provides the Court with a potential plan for
JetBlue post-merger, because Mr. Scheff cannot cite any evidence
to support the likelihood of such plans, his testimony lacks
credibility, and therefore must be given no weight.
H. The Litigation
The Department of Justice, joined by the Plaintiff States,
filed this lawsuit on March 7, 2023. See Compl., ECF No. 1. An
amended complaint followed on March 31, 2023, adding more
Plaintiff States. See Am. Compl., ECF No. 69. The amended
complaint alleges that the proposed merger violates Section 15
of the Clayton Act, as amended, 15 U.S.C. § 25, and requests
that the Court restrain the Defendant Airlines from consummating
the merger.43 Less than a week later, the parties submitted a
joint proposal for case management, see Joint Mot. Entry Case
Management Order, ECF No. 77, which the Court adopted in its
entirety, see Scheduling Order, ECF No. 79. Trial was
originally scheduled to begin on October 16, 2023.44
Trial commenced on October 31, 2023 and ran for seventeen
days. Twenty-two witnesses appeared and testified at trial.
The list included five executives of Spirit, eight executives
The United States brings this action under Section 15 of
43
the Clayton Act. The Plaintiff States bring this action under
Section 16 of the Clayton Act as parens patriae on behalf of
their residents.
44 The Court, however, was forced to delay the start of
trial by two weeks due to other matters.
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from JetBlue, executives from Avelo, Frontier, Allegiant, and
United, as well as the Chief Executive Officer of the BCAD and
the expert witnesses. The parties supplemented their live
testimony with excerpts from depositions from a number of
additional witnesses. Closing arguments occurred on December 5,
2023, and the parties submitted post-trial submissions on
December 13, 2023.
III. CONCLUSIONS OF LAW45
A. The Clayton Act
Section 7 of the Clayton Act prohibits mergers and
acquisitions “where in any line of commerce or in any activity
affecting commerce in any section of the country, the effect of
such acquisition may be substantially to lessen competition.”
15 U.S.C. § 18. The “fundamental purpose” of Section 7 is “to
arrest the trend toward concentration, the tendency to monopoly
-, before the consumer’s alternatives disappear[ ] through
merger ....” United States v. Philadelphia Nat'l Bank, 374 U.S.
321, 367 (1963). Congress therefore “sought to assure ... the
courts the power to brake this force at its outset and before it
gathered momentum.” Brown Shoe Co. v. United States, 370 U.S.
294, 317–18 (1962).
45Portions of both parties’ proposed conclusions of law are
adopted and incorporated herein; citations and quotations are
omitted for readability.
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“Congress used the words ‘may be substantially to lessen
competition’ ... to indicate that its concern was with
probabilities, not certainties.” F.T.C. v. Hackensack Meridian
Health, Inc., 30 F.4th 160, 166 (3rd Cir. 2022) (quoting Brown
Shoe Co., 370 U.S. at 323). “Section 7 does not require proof
that a merger or other acquisition has caused higher prices in
the affected market. All that is necessary is that the merger
create an appreciable danger of such consequences in the
future.” Saint Alphonsus Med. Ctr.-Nampa Inc., 778 F.3d at 788
(quoting Hospital Corp. of Am. v. F.T.C., 807 F.2d 1381, 1389
(7th Cir. 1986)). Section 7's probabilistic standard “creates a
relatively expansive definition of antitrust liability” and
“subjects mergers to searching scrutiny.” California v.
American Stores Co., 495 U.S. 271, 284-285 (1990). Courts,
however, must judge the likelihood of anticompetitive effects in
the context of the “structure, history, and probable future” of
the particular markets that the merger will affect. United
States v. General Dynamics Corp., 415 U.S. 486, 498 (1974)
(quoting Brown Shoe Co., 370 U.S. 294, 322 n.38 (1962)).
B. Mode of Analysis
In United States v. Baker Hughes, Inc., 908 F.2d 981, 982-
83 (D.C. Cir. 1990), the Court of Appeals for the District of
Columbia Circuit established a three-part, burden-shifting
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framework for evaluating antitrust cases under Section 7 of the
Clayton Act. As one court recently described the framework:
Typically the [plaintiff] establishes a prima facie
case by showing that the transaction in question will
significantly increase market concentration, thereby
creating a presumption that the transaction is likely
to substantially lessen competition. Once the
[plaintiff] establishes the prima facie case, the
[defendant] may rebut it by producing evidence to cast
doubt on the accuracy of the [plaintiff]'s evidence as
predictive of future anti-competitive effects.
Finally, if the [defendant] successfully rebuts the
prima facie case, the burden of production shifts back
to the [plaintiff] and merges with the ultimate burden
of persuasion, which is incumbent on the [plaintiff]
at all times.
New York v. Deutsche Telekom AG, 439 F. Supp. 3d 179, 198–99
(S.D.N.Y. 2020) (quoting Chicago Bridge & Iron Co. N.V. v.
F.T.C., 534 F.3d 410, 423 (5th Cir. 2008) (internal citations
omitted)).46
46Of course, this framework, at first blush appears “somewhat
artificial” and the “shifting of the burdens of production, with
the ultimate burden of persuasion remaining always with the
government, conjures up images of a tennis match, where the
government serves up its prima facie case, the defendant returns
with evidence undermining the government's case, and then the
government must respond to win the point.” Illumina, Inc. v.
Fed. Trade Comm'n, 88 F.4th 1036, 1057 (5th Cir. 2023). As the
Fifth Circuit and others have observed -- and as the case was
tried to this Court -- “[i]n practice, . . . the government
usually introduces all of its evidence at one time, and the
defendant responds in kind. Thus, the evidence is often
considered all at once and the burdens are often analyzed
together.” Id. (citations and quotations omitted).
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“To establish a prima facie case, the Government must (1)
propose the proper relevant market and (2) show that the effect
of the merger in that market is likely to be anticompetitive.”
Fed. Trade Comm'n v. Penn State Hershey Med. Ctr., 838 F.3d 327,
337-338 (3d Cir. 2016). If the Government establishes a prima
facie case, the burden of production falls to the Defendant
Airlines to rebut that case, by showing “either that the
combination would not have anticompetitive effects or that the
anticompetitive effects of the merger will be offset by
extraordinary efficiencies resulting from the merger.” Id. at
347 (citing F.T.C. v. H.J. Heinz Co., 246 F.3d 708, 718 (D.C.
Cir. 2001)). The burden of production on the Defendant Airlines
at this step is “relatively low.” United States v. Anthem,
Inc., 236 F. Supp. 3d 171, 213 (D.D.C. 2017), aff’d, 855 F.3d
345 (D.C. Cir. 2017). If the Defendant Airlines successfully
rebut the prima facie case, the burden shifts back to the
Government in the third step “and merges with the ultimate
burden of persuasion, which remains with the government at all
times.” United States v. Bertelsmann SE & Co. KGaA, 646 F.
Supp. 3d 1, 23 (D.D.C. 2022) (quoting Baker Hughes, 908 F.2d at
983). “The [G]overnment has the ultimate burden of proving a
Section 7 violation by a preponderance of the evidence.” See,
e.g., United States v. Aetna Inc., 240 F. Supp. 3d 1, 19 (D.D.C.
2017) (quoting United States v. H & R Block, Inc., 833 F. Supp.
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2d 36, 49 (D.D.C. 2011)). A “‘preponderance of the evidence‘
means ‘more likely true than not.’” Diaz-Alarcon v. Flandez-
Marcel, 944 F.3d 303, 305 n.2 (1st Cir. 2019) (quoting United
States v. Marino, 833 F.3d 1, 8 (1st Cir. 2016)). An
acquisition violates Section 7 if it the result “may be
substantially to lessen competition.” 15 U.S.C. § 18. The
Government’s ultimate burden, therefore, is to prove that a
merger or acquisition more likely than not “may be substantially
to lessen competition.” Id.; see Illumina, Inc., 88 F.4th at
1059.
C. Market Definition
1. Legal Framework
Relevant markets are the “area of effective competition”
within which competition may be lessened. Brown Shoe, 370 U.S.
at 324. They are defined “by reference to a product market (the
‘line of commerce’) and a geographic market (the ‘section of the
country’).” Id. (citation and quotation omitted). Defining
relevant markets helps ascertain where “the effect of the merger
on competition will be direct and immediate.” Philadelphia
Nat’l Bank, 374 U.S. at 357; see Vazquez-Ramos v. Triple-S
Salud, Inc., 55 F.4th 286, 296 (1st Cir. 2022) (“The relevant
market is ‘the area of effective competition....’”) (quoting
Ohio v. American Express Co., 585 U.S. ---, 138 S. Ct. 2274,
2285 (2018)).
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Courts should apply “a pragmatic, factual approach to
definition of the relevant market and not a formal, legalistic
one.” Brown Shoe, 370 U.S. at 336. Market definition is a
factual determination that must consider the “commercial
realities” of the marketplace. Eastman Kodak Co. v. Image Tech.
Servs., Inc., 504 U.S. 451, 482 (1992) (quoting United States v.
Grinnell, 384 U.S. 563, 572 (1966)). Markets may be defined
from “the perspective of consumers” because “[i]t is the
consumer’s options and the consumer’s choices among them on
which relevant market analysis depends.” Flovac, Inc. v.
Airvac, Inc., 817 F.3d 849, 855 (1st Cir. 2016); see also United
States v. E. I. du Pont de Nemours & Co., 351 U.S. 377, 395
(1956) (“In considering what is the relevant market for
determining the control of price and competition, no more
definite rule can be declared than that commodities reasonably
interchangeable by consumers . . . .”).
These consumer-centric principles apply specifically in
defining the relevant geographic market. A relevant geographic
market “consists of ‘the geographic area in which the defendant
faces competition and to which consumers can practically turn
for alternative sources of the product.’” Coastal Fuels of P.R.,
Inc. v. Caribbean Petroleum Corp., 79 F.3d 182, 196 (1st Cir.
1996) (quoting Baxley-DeLamar v. American Cemetery Assn., 938
F.2d 846, 850 (8th Cir. 1991)); accord Tampa Elec. Co. v.
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Nashville Coal Co., 365 U.S. 320, 327 (1961) (geographic market
is the “area in which the seller operates, and to which the
purchaser can practicably turn for supplies”). Therefore, if
customers “would not consider [a firm] a viable alternative”
because it operates exclusively outside the geographic area to
which the customers can practically turn for the relevant
product, then that firm is outside the relevant geographic
market. Home Placement Servs., Inc. v. Providence J. Co., 682
F.2d 274, 280 (1st Cir. 1982).
Of course, in defining the relevant market, the Court may
and should also consider the competitive effects on industry
participants –- it would be “erroneous” to “defin[e] a market on
the basis of demand considerations alone.” Rebel Oil Co. v.
Atlanta Richfield Co., 51 F.3d 1421, 1436 (9th Cir. 1995); see
also American Express Co., 138 S. Ct. at 2285 (explaining in the
Sherman Act context that the “area of effective competition” is
typically the “arena within which significant substitution in
consumption or production occurs” (emphasis added)); see also
United States Healthcare, Inc. v. Healthsource, Inc., 986 F.2d
589, 599 (1st Cir. 1993) (“Usage patterns, customer surveys,
actual profit levels, comparison of features, ease of entry, and
many other facts are pertinent in answering the question [of
market definition].”).
2. Defining the Market
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Although the parties here agree that the relevant service
market for assessing the competitive effects of the proposed
acquisition is scheduled air passenger service, the parties
dispute the appropriate geographic scope of the market: the
Government argues that every route on which Spirit or JetBlue
currently flies (or intends to fly absent the merger) is, in
isolation, a relevant market; the Defendant Airlines advocate
for a national geographic market. Both parties make a
compelling case.
As previously explained, the airline industry is incredibly
dynamic, with mobile assets (aircraft, pilots, crews, etc.) and
constant exit and entry of new routes by airlines. Participants
in the airline industry also compete vigorously at the national
level: among other things, routes and flight frequencies change
constantly in accordance with nationally planned route networks,
airlines choose their business model and on-board product
offerings at the national level, and airlines compete nationwide
through valuable customer loyalty programs. An airline’s
relevance and value to consumers often hinges not just on the
price and specific route, but also its nationwide loyalty
program, airport presence, national and international route
network, and product offerings.
Airlines also make many of their decisions on the route-by-
route level, themselves oftentimes referring to an O&D pair as a
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“market.” Airlines consistently plan pricing and network
planning at the route level, and decisions to enter or exit a
route are made with the specific, local customers in mind. The
Defendant Airlines concede that airlines compete at the route
level and that they track other airlines’ actions on a route-by-
route level.
Origin-and-destination pairs are the geographic areas
within which “consumers can practically turn for alternative
sources of” scheduled air passenger service. Coastal Fuels, 79
F.3d at 198 (quoting Baxley-DeLamar, 938 F.2d at 850). The
purpose of scheduled air passenger service is to travel from one
place to another. For consumers originating in one metropolitan
area and purchasing scheduled air passenger service to travel to
another metropolitan area, such consumers “would not consider it
a viable alternative” to purchase scheduled air passenger
service between a different origin-and-destination pair. Home
Placement Servs., 682 F.2d at 280.
Historically, O&D pairs have also been considered relevant
geographic markets for evaluating competition between airlines
in the market for scheduled air passenger service. See United
States v. American Airlines Grp. Inc., 2023 WL 3560430, at *36
(“Here the parties agree, and the Court finds, that the relevant
product market is ‘scheduled air passenger service,’ and the
relevant geographic markets are O&Ds ‘in which Defendants
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compete or would likely compete absent the NEA.’”); see also
Spirit Airlines, Inc. v. Northwest Airlines, Inc., 431 F.3d 917,
933 (6th Cir. 2005) (accepting Spirit’s position that routes are
relevant geographic markets: “It is at the route level, after
all, that airlines actually compete with one another.”)
(internal citation omitted); Fjord v. AMR Corp., 502 B.R. 23, 40
(Bankr. S.D.N.Y. 2013) (noting that both parties accepted that
“city-pairs are the properly defined market,” and rejecting a
national market because “[a] product market contemplates
products that are viable substitutes for each other” and
plaintiffs had not explained how “a flight from Los Angeles to
New York would compete with a flight from Detroit to Seattle”);
Malaney v. UAL Corp., No. 3:10-CV-02858-RS, 2010 WL 3790296, at
*12 (N.D. Cal. Sept. 27, 2010), aff’d, 434 F. App’x 620 (9th
Cir. 2011) (finding city-pair markets persuasive and rejecting
national market because “plaintiffs have not shown how, for
example, a flight from San Francisco to Newark would compete
with a flight from Seattle to Miami”); In re Nw. Airlines Corp.
Antitrust Litig., 197 F. Supp. 2d 908, 915 (E.D. Mich. 2002)
(“[C]ity-pairs seem to comport with the ordinary and natural
understanding of consumers as they contemplate the purchase of
this industry’s product—namely, such a consumer typically would
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survey the options for travel between the desired origin and
destination cities.”).47
This Court, therefore, defines the relevant geographic
market in this case as each individual O&D pair, otherwise known
as a route, on which the Defendant Airlines currently compete.
In doing so, the Court will continue to consider the impact of
the national geographic market and those factors relevant to it.
In ruling the relevant market as the individual O&D pairs
upon which the Defendant Airlines compete, the Court dismisses
as immaterial, for the purposes of the Government’s prima facie
case, the “Spirit-entry routes” that the Government has put
forth. Spirit is not currently present on these routes and
instead has only considered entering these routes absent the
merger. Neither of the merging Defendant Airlines currently
47The Defendant Airlines cite to previous airline antitrust
cases in which the Government has posited broader geographic
markets than O&D pairs. In both cases cited, however, the
market proposed by the Government was still not a national
market, but instead a market encompassing all flights in and out
of a certain airport. See, e.g., Compl. ¶¶ 31-32, United States
v. United Continental Holdings, Inc., No. 2:15-cv-07992 (D.N.J.
Nov. 10, 2015), ECF No. 1 (Government asserting that all air
passenger service “to and from Newark [Liberty Airport]
constitutes a relevant antitrust market,” and that “it is
appropriate to aggregate all routes that either originate or
terminate in Newark for the purpose of defining a relevant
market in which the transaction will cause anticompetitive
harm”); Am. Compl. ¶ 31, United States v. US Airways Grp., Inc.,
Case No. 1:13-cv-01236 (D.D.C. Sep. 5, 2013), ECF No. 73
(defining a geographic market for slots at Reagan National
Airport in Washington, D.C.).
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compete on these routes, and therefore they are not relevant
under Section 7.48 See, e.g., Philadelphia Nat’l Bank, 374 U.S.
at 357 (“The proper question to be asked in this case is not
where the parties to the merger do business or even where they
compete, but where, within the area of competitive overlap, the
effect of the merger on competition will be direct and
immediate.”).
The Court accepts as relevant markets the following routes:
nonstop overlap routes that both JetBlue and Spirit currently
fly (both those identified by the Government as “presumptively
illegal” and those identified by the Government as
“econometric”); “connect routes”, which are the routes on which
both Spirit and JetBlue fly connecting service; “mixed routes”,
which are the routes on which one of the Defendant Airlines
flies direct service and the other provides connective service,
and “Spirit-only routes”, which are routes that Spirit currently
flies, but JetBlue does not.
D. Prima Facie Case
1. Presumption of Illegality
48The Government cannot request a geographic market of
specific O&D pairs and then simultaneously request the inclusion
of markets in which Spirit only competes with non-party
airlines. To do so would be to amplify the national geographic
market in which both Spirit and JetBlue compete -- the
Government cannot have its cake and eat it too.
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The Government argues that the proposed acquisition at bar
is “presumptively illegal” because it results in “a merger which
produces a firm controlling an undue percentage share of the
relevant market, and results in a significant increase in the
concentration of firms in that market.” Philadelphia Nat’l
Bank, 374 U.S. at 363; see also United States v. Continental Can
Co., 378 U.S. 441, 458 (1964) (“Where a merger is of such a size
as to be inherently suspect, elaborate proof of market
structure, market behavior and probable anticompetitive effects
may be dispensed with in view of [Section] 7’s design to prevent
undue concentration.”). As previously stated, see supra Section
II.F.2., the proposed acquisition would result in a combined
firm market share of either over 2,500 HHI, or an increase in
HHI of over 200, in multiple relevant markets. An HHI over
2,500, or an increase in HHI of over 200, is considered “highly
concentrated” and has been presumed illegal. Aetna, 240 F.
Supp. 3d at 42; see also ProMedica Health System, Inc. v.
F.T.C., 749 F.3d 559, 568 (6th Cir. 2014) (noting that a 1,078-
point increase to 4,391 and a 1,323-point increase to 6,854
“blew through [the presumption] barriers in spectacular
fashion”); Heinz, 246 F.3d at 716–17 (510-point increase from
4,775 created a presumption of illegality “by a wide margin”);
F.T.C. v. Sysco Corp., 113 F. Supp. 3d 1, 61 (D.D.C. 2015)
(economic and other evidence “has shown that a merged Sysco-USF
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will significantly increase concentrations” and that the
Government “therefore has made its prima facie case and
established a rebuttable presumption that the merger will lessen
competition in the local markets”); H & R Block, 833 F. Supp. 2d
at 71–72 (enjoining a transaction that would have given the
combined firm only a 28.4 percent market share because the
transaction would have resulted in an increase in the HHI of
more than 200 and a post-acquisition HHI that would have
exceeded 2,500).
The Government identifies 183 relevant routes, each of
which is its own relevant market, in which this presumption
applies.49 The Court finds that this presumption, spurred by the
Department of Justice’s own Horizontal Merger Guidelines, does
not, on its own, sustain a prima facie case. “[P]resumptions
are not self-executing.” Deutsche Telekom, 439 F. Supp. 3d at
206. The Court, therefore, moves on to the direct evidence of
anticompetitive effects presented by the Government. See Saint
Alphonsus, 778 F.3d at 785-86 (“[P]laintiffs in [Section] 7
cases generally present other evidence as part of their prima
facie case.”).
The 183 routes can be broken down into: 51 nonstop
49
overlap routes, 15 mixed overlap routes, and 117 connect overlap
routes. The Government does not, nor could it, identify any
routes on which the presumption applies in the “Spirit-only”
category. Of these 51 nonstop routes, 35 have met the
presumption of illegality consistently over the last 3 years.
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2. Direct Evidence of Anticompetitive Effects
a. Elimination of Head-to-Head Competition
Between JetBlue and Spirit
First, the Government has clearly demonstrated that the
merger will cause unilateral anticompetitive effects, as JetBlue
and Spirit currently compete head-to-head on multiple routes.
“The extent of direct competition between the products sold by
the merging parties is central to the evaluation of unilateral
effects.” ProMedica, 749 F.3d at 569 (quoting Horizontal Merger
Guidelines § 6.1).50 Acquisitions “that eliminate head-to-head
competition between close competitors often result in a
lessening of competition.” F.T.C. v. Staples, Inc., 190 F.
Supp. 3d 100, 131 (D.D.C. 2016) (“Staples II”) (citing
Horizontal Merger Guidelines § 6); see also, e.g., Heinz, 246
F.3d at 716–17 (ruling that the Government’s prima facie case
was “bolstered by the indisputable fact that the merger will
eliminate competition between the two merging parties”); H & R
Block, 833 F. Supp. 2d at 81–82 (noting the likelihood of
50The Court is aware that after the trial concluded, on
December 18, 2023, the F.T.C. and DOJ issued a revised set of
Merger Guidelines. See Justice Department and Federal Trade
Commission Release 2023 Merge Guidelines, U.S. Dep’t of Just.,
Off. of Pub. Affs., https://www.justice.gov/opa/pr/justice-
department-and-federal-trade-commission-release-2023-merger-
guidelines (last visited Jan. 12, 2024); 2023 Merger Guidelines,
U.S. Dep’t of Just., Antitrust Div.,
https://www.justice.gov/atr/2023-merger-guidelines (last visited
Jan. 12, 2024).
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unilateral anticompetitive effects given evidence of H & R Block
lowering its prices in response to direct competition from
TaxACT, including H & R Block documents that “appear to
acknowledge that TaxACT has put downward pressure on HRB’s
pricing ability”).
If the collaborating parties are particularly close
competitors, the unilateral effects are especially acute. See
Bertelsmann, 646 F. Supp. 3d at 39 (“The analysis of unilateral
effects focuses on how closely the merging firms currently
compete, in order to extrapolate the effects of eliminating that
competition.”); F.T.C. v. Libbey, 211 F. Supp. 2d 34, 47-48
(D.D.C. 2002) (discussing evidence of head-to-head competition
between the merging parties, including taking customers from
each other); F.T.C. v. Swedish Match, 131 F. Supp. 2d 151, 169
(D.D.C. 2000) (“[T]he weight of the evidence demonstrates that a
unilateral price increase by Swedish Match is likely after the
acquisition because it will eliminate one of Swedish Match’s
primary direct competitors.”). The parties need not be each
other’s closest competitors to raise a threat to competition;
being close competitors is enough for an acquisition to result
in upward pricing pressure. Anthem, 236 F. Supp. 3d at 216
(“Anthem’s insistence that United, not Cigna, is its ‘closest’
competitor, is beside the point. The acquired firm need not be
the other’s closest competitor to have an anticompetitive
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effect; the merging parties only need to be close
competitors.”).
The loss of Spirit’s influence on JetBlue as a head-to-head
competitor would likely result in less competition to both
discipline the prices and spur the innovation of JetBlue as a
smaller, maverick -– more competitive -- market participant.
b. Elimination of Spirit’s Competition with
Other Airlines
Along with Spirit’s influence on JetBlue as a competitor in
the scheduled airline passenger market, the proposed acquisition
would eliminate Spirit as a competitor to all other airlines in
the market, resulting in less pressure on all other airlines to
compete. Spirit, as the first domestic ULCC, is a uniquely
disruptive competitor that consistently puts pressure on other
airlines, both to lower their prices and to innovate (whether
through the introduction of basic economy fares or other cost-
saving measures). “Anticompetitive effects are more likely
still when ‘the merger would result in the elimination of a
particularly aggressive competitor in a highly concentrated
market.’” Aetna, 240 F. Supp. 3d at 43, 74 (quoting F.T.C. v.
Staples, Inc., 970 F. Supp. 1066, 1083 (D.D.C. 1997) (“Staples
I”)) (enjoining merger in part because Aetna was a “particularly
aggressive” Medicare Advantage competitor); see also United
States v. Alcoa, 377 U.S. 271, 281 (1964) (“The record shows
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indeed that Rome was an aggressive competitor. . . .
Preservation of Rome, rather than its absorption by one of the
giants, will keep it ‘as an important competitive factor’ . . .
. Rome seems to us the prototype of the small independent that
Congress aimed to preserve by [Section] 7.”); American Airlines,
2023 WL 3560430, at *34, 36 (finding that anticompetitive
effects of joint venture between direct competitors JetBlue and
American Airlines were amplified because “JetBlue has sacrificed
a degree of its independence and weakened its status as an
important ‘maverick’ competitor in the [highly concentrated
airlines] industry”).
The loss of Spirit’s innovation, in particular, would be a
loss for all consumers in the national scheduled airline
passenger market. A reduction in product innovation resulting
from an acquisition is a cognizable harm to competition. See,
e.g., Hackensack, 30 F.4th at 172 (recognizing that
anticompetitive effects can include reduced product innovation);
Viamedia, Inc. v. Comcast Corp., 951 F.3d 429, 475 (7th Cir.
2020) (same); Anthem, 855 F.3d at 361 (a “threat to innovation
is anticompetitive in its own right”).
The key question in determining whether a transaction may
substantially lessen competition by dampening the firm’s
disruptive force is whether the firm “play[s] a special role in
th[e] market that constrains prices.” H & R Block, 833 F. Supp.
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2d at 80; see also Hackensack, 30 F.4th at 172 (recognizing that
anticompetitive effects can include reduced product innovation).
In eliminating Spirit from the marketplace, the proposed
transaction would, by definition, dampen Spirit’s disruptive
force. As Spirit plays a special role in the market, both to
constrain prices and spur innovation, the proposed transaction
would substantially lessen competition among other, non-party
airlines.
c. Elimination of Spirit’s as a Choice for
Consumers
A merger’s elimination of a product option that consumers
value is a cognizable harm to competition. See, e.g., Anthem,
855 F.3d at 366 (“[I]f merging firms would withdraw a product
that a significant number of customers strongly prefer to those
products that would remain available, this can constitute a harm
to customers over and above any effects on the price or quality
of any given product.”) (internal citations omitted) (quoting
Horizontal Merger Guidelines § 6.4); see also F.T.C. v. Indiana
Fed’n of Dentists, 476 U.S. 447, 459 (1986) (ruling that
consumers can be harmed by an agreement to “withhold from
customers a particular service that they desire” since it
“limit[s] consumer choice by impeding the ordinary give and take
of the market place”) (internal citations omitted); MacDermid
Printing Sols. LLC v. Cortron Corp., 833 F.3d 172, 183 (2d Cir.
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2016) (“We have suggested that actions that reduce consumer
choice are inherently anticompetitive.”); Realcomp II, Ltd. v.
F.T.C., 635 F.3d 815, 829–31 (6th Cir. 2011) (affirming finding
that “restrictions on consumer choice,” specifically
“restricting consumer access to discount listings,” is “likely
to have an adverse impact on competition”); United States v.
Dentsply Int’l, Inc., 399 F.3d 181, 194 (3d Cir. 2005); Glen
Holly Ent., Inc. v. Tektronix Inc., 352 F.3d 367, 374 (9th Cir.
2003).
The Government has demonstrated that consumers value Spirit
flights as a unique, economical product option. The removal of
Spirit as an option for consumers, therefore, would constitute a
cognizable harm.
3. The Government Has Established a Prima Facie
Case
The increased concentration that would occur in relevant
markets if proposed acquisition were to succeed, as well as the
other anticompetitive effects demonstrated by the Government --
each independently sufficient -- establishes a prima facie case
of harm under Section 7.
E. The Defendant Airlines’ Rebuttal
The “quantum of evidence defendants must produce to shift
the burden back is relatively low.” Anthem, 236 F. Supp. 3d at
213 (“[D]efendants are not required to ‘clearly disprove
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anticompetitive effect,’ but rather to make ‘a showing.’”)
(citing Baker Hughes, 908 F.2d at 991). The Defendant Airlines’
burden is necessarily low because “[i]f the burden of production
imposed on a defendant is unduly onerous, the distinction
between that burden and the ultimate burden of persuasion --
always an elusive distinction in practice -- disintegrates
completely.” Baker Hughes, 908 F.2d at 991. “A defendant
required to produce evidence ‘clearly’ disproving future
anticompetitive effects must essentially persuade the trier of
fact on the ultimate issue in the case—whether a transaction is
likely to lessen competition substantially. Absent express
instructions to the contrary, [the Court is] loath to depart
from settled principles and impose such a heavy burden.” Id.
Though a defendant’s burden is low, the stronger a
plaintiff’s prima facie case, the heavier the rebuttal burden
becomes. In Baker Hughes, the court reasoned that the
defendants’ rebuttal bar was relatively low in that instance
because the plaintiff in that case relied only on a structural
presumption, Baker Hughes, 908 F.2d at 983, but that reasoning
“does not control” when a plaintiff, like the Government here,
bolsters its prima facie case by taking on the defendants’
rebuttal arguments in its prima facie case. Olin Corp. v.
F.T.C., 986 F.2d 1295, 1305 (9th Cir. 1993). Rather, “if a
Government’s prima facie case anticipates and addresses the
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respondent’s rebuttal evidence, . . . the prima facie case is
very compelling and significantly strengthened,” and “the
[defendants’] burden of production on rebuttal is also
heightened.” Chicago Bridge, 534 F.3d at 426; see also
Hackensack, 30 F.4th at 173 (“[D]irect evidence strengthens the
probability that the merger will likely lead to anticompetitive
effects and, thus, the [plaintiff’s] prima facie case.”);
ProMedica, 749 F.3d at 571; Heinz, 246 F.3d at 717 (evidence of
head-to-head competition “bolster[s]” plaintiff’s prima facie
case).
Defendants may meet their burden to rebut the Government’s
prima facie case either by “affirmatively showing why a given
transaction is unlikely to substantially lessen competition, or
by discrediting the data underlying the initial presumption in
the government’s favor.” Baker Hughes, 908 F.2d at 991. The
Defendant Airlines here attempt to do both and have also
provided other evidence regarding the potential pro-competitive
effects of the proposed acquisition.
1. Ease of Entry
The Defendant Airlines first point to the ease of entry by
potential competitors into the relevant markets that may be
harmed, particularly other ULCCs (but also LCCs and legacy
airlines with unbundled, basic economy offerings). Courts have
long held that “entry by potential competitors may be considered
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in appraising whether a merger will ‘substantially lessen
competition.’” United States v. Waste Mgmt., Inc., 743 F.2d
976, 983 (2d Cir. 1984). “Whether entry is included as part of
the market definition or in the ease of entry evaluation,
practically, is of no consequence. In either event, the result
is the same. The exercise of market power will be thwarted and
collusive behavior will not be possible.” F.T.C. v. Occidental
Petroleum Corp., No. 86-900, 1986 WL 952, at *8 (D.D.C. Apr. 29,
1986) (internal citation omitted); see also Deutsche Telekom,
439 F. Supp. 3d at 207 (courts may include “ease of entry into
the market” in assessing the totality of the circumstances under
Step Two of Baker Hughes).
The Defendant Airlines need not show competitors will enter
the relevant markets or precisely when the entry will occur.
Baker Hughes, 908 F.2d at 983 (“The government argues that, as a
matter of law, section 7 defendants can rebut a prima facie case
only by a clear showing that entry into the market by
competitors would be quick and effective. . . . We find no merit
in the legal standard propounded by the government. It is
devoid of support in the statute, in the case law, and in the
government's own Merger Guidelines.”); United States v. Syufy
Enters., 903 F.2d 659, 667 n.13 (9th Cir. 1990) (“We cannot and
should not speculate as to the details of a potential
competitor’s performance; we need only determine whether there
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were barriers to the entry of new faces into the market.”).
Instead, a defendant need only show that potential competitors
could enter relevant markets, and that barriers to that entry
are low.
There is no requirement, therefore, to prove that entry
would replace Spirit one-for-one, on each route that it may exit
post-merger. The Government is correct that the Defendant
Airlines must demonstrate that entry into the relevant markets
would be “timely, likely, and sufficient in its magnitude,
character, and scope to deter or counteract the competitive
effects of concern.” F.T.C. v. Sanford Health, 926 F. 3d 959,
965 (8th Cir. 2019) (quoting Horizontal Merger Guidelines § 9).51
The Defendant Airlines, however, have done that successfully, as
explained below.
a. Timely Entry
51See also, e.g., Penn State Hershey, 838 F. 3d at 351–52;
Chicago Bridge, 534 F.3d at 429–30; Bertelsmann, 646 F. Supp. 3d
at 51; Deutsche Telekom, 439 F. Supp. 3d at 226; F.T.C. v. Wilh.
Wilhelmsen Holding ASA, 341 F. Supp. 3d 27, 66–67 (D.D.C. 2018);
United States v. Energy Sols., Inc., 265 F. Supp. 3d 415, 443
(D. Del. 2017); Aetna, 240 F. Supp. 3d at 52–53; Saint Alphonsus
Med. Ctr.-Nampa, Inc. v. St. Luke’s Health Sys., Ltd., Nos.
1:12-CV-00560-BLW; 1:13-CV-00116-BLW, 2014 WL 407446, at *19 (D.
Idaho Jan. 24, 2014), aff’d, 778 F.3d 775 (9th Cir. 2015);
United States v. Bazaarvoice, Inc., No. 13-cv-00133, 2014 WL
203966, at *39 (N.D. Cal. Jan. 8, 2014); F.T.C. v. ProMedica
Health Sys., No. 3:11 CV 47, 2011 WL 1219281, at *57 (N.D. Ohio
Mar. 29, 2011); United States v. Visa U.S.A., Inc., 163 F. Supp.
2d 322, 342 (S.D.N.Y. 2001); F.T.C. v. Cardinal Health, Inc., 12
F. Supp. 2d 34, 54–58 (D.D.C. 1998).
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Entry is “timely” when it is “soon enough to offset
anticompetitive effects of the merger.” Sanford Health, 926
F.3d at 965; accord Energy Sols., 265 F. Supp. 3d at 443 (“Entry
is timely only if it rapid enough to deter or render
insignificant the anticompetitive effects of the merger”)
(citing Anthem, 236 F. Supp. 3d at 221–22). When entry will
take a period of several years, it likely will not deter
anticompetitive activity by the merged firm. See F.T.C. v.
Elders Grain Inc., 868 F.2d 901, 905 (7th Cir. 1989) (“And since
entry into the [dry corn] industry is slow -- it takes three to
nine years to design, build, and start operating a new mill --
colluding sellers need not fear that any attempt to restrict
output in order to drive up price would be promptly nullified by
new production.”); Visa, 163 F. Supp. 2d at 342 (“The higher the
barriers to entry, and the longer the lags before new entry, the
less likely it is that potential entrants would be able to enter
the market in a timely, likely, and sufficient scale to deter or
counteract any anticompetitive restraints.”).
The Government argues that here the appropriate timeframe
to evaluate future competitive entry is as fast as possible,
“possibly immediate,” due to the dynamic characteristics of the
airline industry. See Pls.’ Proposed Conclusions of Law ¶ 82,
ECF No. 448 (“In some markets, this may mean entry has to occur
within weeks or month....”). Such a timeframe is both
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unrealistic and a walk-back from the Government’s concession in
its pretrial brief that entry is timely if it is “rapid enough
to deter or render insignificant the anticompetitive effects of
the merger within two to three years.” Pls.’ Pretrial Br. at
23, ECF No. 289. Two-to-three years is the timeline the
Defendant Airlines propose. Considering the parties at one time
agreed and based upon the record of this case –- including the
unique circumstances of the post-pandemic’s profound effects on
the airline industry -- the Court rules that a two-to-three year
timeframe of reference controls.
Using two-to-three years as the timeframe in which to
situate the Court’s analysis, the Defendant Airlines
demonstrated that entry would be “timely.” In particular, entry
barriers on routes are very low, aircraft are mobile, and entry
onto routes, including the 35 routes on which the Government
most focused, happens almost constantly. Not only that, but the
Defendant Airlines adduced evidence directly from potential
entrants who cogently testified that they had both the ability
and incentive to enter profitable routes vacated by Spirit.52
52For instance, when an airline exits or reduces capacity
on a “proven” route, other airlines seek quickly to enter or
expand to fill any unmet demand. Tr. 11/14/23 (Biffle/Frontier)
104:3–13 (explaining that if Spirit exits routes, Frontier
“would look [to enter] those probably first because they’re
proven”); Tr. 11/3/23 (Yealy/Avelo) 39:21–40:18 (explaining
Avelo began commercial service from Dubuque, Iowa following
American’s exit from the airport); Dep. 7/17/23
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Two-to-three years after the merger would likely be just as
JetBlue is making headway in converting Spirit aircraft, as the
Defendant Airlines expect it to take 18 months simply to receive
their FAA Combined Operating Certificate. Within that
timeframe, the Court could reasonably expect some entry by other
ULCCs, LCCs, and/or legacy airlines with unbundled, basic
economy offerings into almost any of the markets vacated by
Spirit.
b. Likely Entry
Entry is “likely” only “if it would be profitable and
feasible, accounting for all the attendant costs and
difficulties.” Energy Sols., 265 F. Supp. 3d at 443; accord
Anthem, 236 F. Supp. 3d at 222 (“[E]ntry must be ‘profitable,
accounting for the assets, capabilities, and capital needed and
the risks involved, including the need for the entrant to incur
costs that would not be recovered if the entrant later exits.’”
(quoting Horizontal Merger Guidelines § 9.2)). “As a matter of
economic reality, companies do not simply enter any market they
can.” Bazaarvoice, 2014 WL 203966, at *71. The likelihood of
entry depends on whether entrants “have the requisite ability”
(Neeleman/Breeze) 215:21– 216:18 (explaining Breeze monitors
Frontier’s entries and exits because “those are potential
markets that we can go in. These are all, you know, either
backfill opportunities or areas that we have to take a look
at”).
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to enter, whether entry into the relevant markets is “within
their strategy,” and whether entry would be financially
attractive to entrants, considering the risks of entry and the
economic trade-offs of entering the relevant markets compared to
using those same resources to enter other markets or pursue
other business opportunities. Id.
The “mere threat of entry” is insufficient. Chicago
Bridge, 534 F.3d at 430 n.10. Rather, “there is a high
threshold applied to assertions as to whether a company can be
considered a potential entrant,” and Defendants “must provide
evidence that the likelihood of entry reaches a threshold
ranging from ‘reasonable probability’ to ‘certainty.’” Id. To
be “likely,” entry must also be “tied to the relevant geography”
because entry outside the relevant markets cannot “counteract a
merger’s anticompetitive effects.” Anthem, 236 F. Supp. 3d at
222; see also Cardinal Health, 12 F. Supp. 2d at 56 (“The
history of entry into the relevant market is a central factor in
assessing the likelihood of entry in the future.”).
Again, the Defendant Airlines have successfully
demonstrated that entry by other airlines is likely. As
referenced previously, see footnote 50, supra, other ULCCs would
likely consider previous Spirit routes immediately, as they are
proven to be profitable. The proposed divestitures would
particularly assist in this entry; of the five cities in which
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Spirit and JetBlue currently compete most heavily, either low
barriers to entry and the already strong presence of other
airlines (Orlando, San Juan) or divestitures (Miami/Fort
Lauderdale, Boston, New York City) make such entry exceedingly
likely. The evidence on entry is consistent with or stronger in
this case than many of the other cases that have found entry
sufficient to offset or deter any anticompetitive effects. In
those cases, the courts found mergers did not violate Section 7
based on evidence of low barriers to entry and some evidence of
historical entry that showed competitors were able to chase
profit opportunities. See Baker Hughes, 908 F.2d at 988-89 (no
Section 7 violation where some entry barriers existed but were
not high enough to deter entry in the event of “supracompetitive
pricing” given evidence of recent entry into the market and
other competitors that could potentially enter); Syufy Enters.,
903 F.2d at 665 (no Section 7 violation where there were low
barriers to entry and significant expansion by remaining
competitor); Waste Mgmt., 743 F.2d at 983 (no Section 7
violation where there were low barriers to entry, assets were
mobile, and there was evidence of a competitor from a
neighboring city entering the market).
While the Court is tasked with a forward-looking exercise,
recent entry by competitors can undermine claims of competitive
harms. See F.T.C. v. Qualcomm Inc., 969 F.3d 974, 996 (9th Cir.
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2020). This “history of entry into the relevant market is a
central factor in assessing the likelihood of entry in the
future.” Cardinal Health Inc., 12 F. Supp. 2d at 56. The
Government’s expert, Dr. Chipty, evaluated more than 4,700 entry
events from just four ULCCs that she identified over the course
of five-and-a-half years, from 2017 to 2022. Numerous fact
witnesses also confirmed the large number of entries and exits
that regularly occur in the airline industry as airlines chase
profitable routes. Evidence in the record even reflects that
other ULCCs have started already entering routes that Spirit
exited this year. There is no evidence in the record that
suggests that this recent history of entry will not continue in
the future. The Court, therefore, finds that entry of other
ULCCs is likely, particularly under the low burden of proof the
Defendant Airlines currently face.
c. Sufficient Entry
The closer question before the Court, therefore, is whether
entry by other ULCCs, as well as LCCs and unbundled offerings
from the legacy airlines, will be sufficient to replace Spirit.
It is this issue that the Defendant Airlines have the most
difficult time grappling, though the Court recognizes that at
this, the second step of the Baker Hughes framework, a
defendant’s burden is low.
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To be “sufficient,” “entry has to be of a ‘sufficient
scale’ adequate to constrain prices and break entry barriers.”
Chicago Bridge, 534 F.3d at 429; accord Penn State Hershey, 838
F.3d at 352 (entrants must “have the ability to constrain post-
merger prices” in the relevant markets) (citation omitted);
Energy Sols., 265 F. Supp. 3d at 443 (“[E]ntry is sufficient
only if it can ‘affect pricing’ and ‘scale to compete on the
same playing field’ as the merged firm.”) (citation omitted);
see also Wilh. Wilhelmsen, 341 F. Supp. 3d at 67 (entry is
sufficient where “the entering competitors provide products that
‘are close enough substitutes to the products offered by the
merged firm to render a price increase unprofitable’ and there
are limited constraints on entrants’ ‘competitive
effectiveness,’ such that one firm can replicate the scale and
strength of a merging firm, or one or more firms can operate
without competitive disadvantage”) (cleaned up) (citing
Horizontal Merger Guidelines §§ 9.1–9.3); Cardinal Health, 12 F.
Supp. 2d at 58 (lack of another national wholesaler after the
merger was “too great a competitive loss --which the regional
wholesalers cannot sufficiently replace”).
When assessing the sufficiency of entry, the relevant
question is whether the potential entrants would enter and
expand beyond their own existing growth plans to replace the
void created by the elimination of the competitive intensity of
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the acquired firm. See F.T.C. v. Tronox, Ltd., 332 F. Supp. 3d
187, 214 (D.D.C. 2018) (rejecting argument regarding entry by
foreign producers because proposed entrants would need to expand
rapidly and, even if they did, would first fulfill existing and
unmet domestic demand before entering the relevant (foreign)
markets); see also Sysco Corp., 113 F. Supp. 3d at 80–81
(rejecting entry and expansion arguments because, despite
evidence of competitors opening new facilities and having
existing plans to grow, distributors had no plans to reposition
or increase planned expansion to compete in the relevant markets
that would be harmed by the merger).
Entry must build upon, rather than supersede, potential
entrants’ existing business plans, because merger analysis
considers the future world with and without the merger. Anthem,
236 F. Supp. 3d at 191 (“In essence, in a merger trial, the
Court is making a prediction about the future.”). Potential
entrants’ existing plans to compete are already baked into the
world without the merger; therefore, those pre-existing growth
or entry plans do not count toward filling the void created by
the merger. If entrants try to enter relevant markets without
growing beyond their pre-existing plans, they would need to
abandon existing markets or markets where they would have
otherwise entered or grown but-for the merger. That entry
cannot offset anticompetitive effects of the merger because it
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would create new harms to competition. Sanford Health, 926 F.3d
at 965 (to offset anticompetitive effects, entry must
“counteract the competitive effects of concern”); cf.
Hackensack, 30 F.4th at 176 (for efficiencies to rebut a prima
facie case they must “not arise from anticompetitive reductions
in output or service”).
Sufficient entry is even more difficult to prove when, as
here, the competitor being eliminated is a unique disruptor in
the industry. Entry by members of an industry’s existing
oligopoly may not be sufficient to fill a competitive void left
by the elimination of a disruptive competitor that had
historically disciplined those larger firms. See Bertelsmann,
646 F. Supp. 3d at 53 (rejecting argument that expansion of
existing “Big Five” would be sufficient due to lack of evidence
that others in the Big Five “could or would compete more
aggressively with the merged company”). Likewise, entry by
competitors unable to replicate the competitive intensity of the
acquired firm is insufficient. Staples II, 190 F. Supp. 3d at
133-37 (rejecting potential entrants who lack the existing
ability to compete of the acquired firm); Cardinal Health, 12 F.
Supp. 2d at 58 (regional competitors unlikely to replicate the
competitive vigor of national competitors).
With the elimination of Spirit, it would fall to other
ULCCs not only to backfill Spirit routes, but also both to
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continue their own growth and to succeed in disciplining other,
larger airlines as to both price and innovation -- a tough row
to hoe. As explained above, see supra Section II.A., airlines
are facing obstacles to growth in the post-pandemic world.
Aircraft manufacturing delays, ATC issues, pilot staffing
issues, and engine problems are currently making airline growth
more difficult. Frontier’s CEO estimated that it would take
Frontier at least five to eight years to replace Spirit and
operate its existing schedule, and this estimate does not even
include maintaining Frontier’s pre-existing growth plan. See
Supra n.8. These constraints on airline growth suggest that
although other airlines are likely to enter markets left by
Spirit and might even enter some within two to three years, such
entry might not be sufficient to replace Spirit’s current
presence in the industry. The Court, therefore, must continue
its analysis before it can determine whether the Defendant
Airlines have successfully rebutted the Government’s prima facie
case.
2. The Government’s Data
The Defendant Airlines attempt to undermine the
Government’s market share data as unreliable, arguing: 1) such
route-level, static market share statistics ignore the
particularities of the airline industry; and 2) such statistics
ignore potential entrants. The Defendant Airlines are correct
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that the airline industry is dynamic, with routes shifting
weekly, if not daily, and this dynamism does lead to robust,
ever-changing competition on routes. Due to these constant
changes, “it cannot be concluded from market statistics alone
that an acquisition will lessen competition.” Occidental
Petroleum, 1986 WL 952, at *7–8 (holding that ongoing “vigorous
price competition” and ease of entry for potential competitors
“lessen[ed] the probative value of the Commission’s market
concentration statistics”).
Ignoring potential entrants can also result in misleading
market shares. “In the present case, a market definition
artificially restricted to existing firms competing at one
moment may yield market share statistics that are not an
accurate proxy for market power when substantial potential
competition able to respond quickly to price increases exists.”
Waste Mgmt., 743 F.2d at 982. The “appraisal of the impact of a
proposed merger upon competition must take into account
potential competition from firms not presently active in the
relevant product and geographic markets.” Id. The Government
and its experts do not fully take that potential competition
into account in their calculation of market shares on routes,
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and that calls into question the predictive value of current
shares and undermines their reliance on the presumption.53 Id.
3. Pro-competitive Effects of the Proposed
Acquisition
Finally, the Defendant Airlines present various pieces of
evidence to establish that the proposed acquisition is in fact
pro-competitive. Again, they do this in two ways: 1) with
evidence that Spirit is struggling financially, suggesting that
the proposed acquisition would in fact protect consumers from
facing a weakened, failing Spirit; and 2) with evidence that the
combined firm would provide a stronger competitive counterpart
to the Big Four, who control 80% of the market, than either
JetBlue or Spirit could do on its own.
There are two legal doctrines relevant to an acquired
firm’s financial performance. The first is the “failing
company” doctrine. This defense, as explained above, takes a
“lesser of two evils approach.” General Dynamics, 415 U.S. at
507. The rationale is that, if a company is on the brink of
failing, “the possible threat to competition resulting from an
acquisition is deemed preferable to the adverse impact on
In calculating the number of presumptively
53
anticompetitive routes, the Government’s experts also were
looking at data that, by the time of trial, was out of date.
Further demonstrating the dynamism of the airline industry, by
the time of trial either Spirit or JetBlue had exited some of
the routes the Government’s experts originally identified.
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competition and other losses if the company goes out of
business.” Id.; accord Energy Sols., Inc., 265 F. Supp. 3d at
444. Numerous Spirit witnesses explained at trial that Spirit
is struggling financially -- including that Spirit anticipates a
$467,000,000 loss for 2023 (on top of prior losses over
$1,000,000,000) and has not been profitable since 2019. These
losses, though significant, do not, on their own, provide an
affirmative defense to the Government’s prima facie case.
A defendant asserting the failing firm defense bears the
“burden of proving” three distinct elements: (1) the acquired
firm “face[s] the grave probability of a business failure,” (2)
“[t]he prospects of reorganization” under the bankruptcy laws
are “dim or nonexistent,” and (3) “the company that acquires the
failing company . . . is the only available purchaser.” Citizen
Publ’g Co. v. United States, 394 U.S. 131, 137–38 (1969)
(internal citations and quotations omitted); accord Dr.
Pepper/Seven-Up Cos. v. F.T.C., 991 F.2d 859, 864–65 (D.C. Cir.
1993); Steves & Sons, Inc. v. JELD-WEN, Inc., 290 F. Supp. 3d
507, 511–12 (E.D. Va. 2018). These requirements reflect the
“strict limits placed on [the] defense” by the Supreme Court in
several of its cases. See General Dynamics, 415 U.S. at 506
(citing cases). Although Spirit is struggling, its executives
testified that the airline had a long-term plan to return to
profitability. See, e.g., Tr. Ex. 678 at 2; Tr. 11/7/2023
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(Gardner/Spirit) 75:2-10. JetBlue is also far from the only
available purchaser, should Spirit find itself in dire need.
The second doctrine that can be relevant to an acquired
firm’s financial performance is the so-called “weakened
competitor” or “flailing firm” defense. Courts view such a
defense skeptically, in part because a “‘weak company’ defense
would expand the failing company doctrine, a defense which has
strict limits.” F.T.C. v. Warner Commc’ns, Inc., 742 F.2d 1156,
1164 (9th Cir. 1984) (citations omitted). One court has
described this defense as “probably the weakest ground of all
for justifying a merger,” Kaiser Alum. & Chem. Corp. v. F.T.C.,
652 F.2d 1324, 1339–41 (7th Cir. 1981), and another dismissed it
as “the Hail-Mary pass of presumptively doomed mergers,”
ProMedica, 749 F.3d at 572. Courts credit the weakened-
competitor defense “only in rare cases, when the defendant makes
a substantial showing that the acquired firm’s weakness, which
cannot be resolved by any competitive means, would cause that
firm’s market share to reduce to a level that would undermine
the Government’s prima facie case.” University Health, 938 F.2d
at 1221. “This argument is disfavored because it fails to
account for the fact that ‘financial difficulties not raising a
significant threat of failure are typically remedied in a
moderate length of time,’ whereas a merger is a relatively
permanent action that eliminates the potential for future
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competition between the merging parties.” Aetna, 240 F. Supp.
3d at 92 (citing Phillip E. Areeda & Herbert Hovenkamp,
Antitrust Law ¶ 963a3 (4th ed. 2016) (“Areeda & Hovenkamp”)).
The Defendant Airlines argue that because Spirit is
struggling financially, its “market share [is reduced] to a
level that would undermine the Government’s prima facie case.”
University Health, 938 F.2d at 1221. But as the ProMedica Court
observed, this argument is a “Hail-Mary pass,” and it misses the
mark. The requirement that an acquired firm’s weakness “cannot
be resolved by any competitive means,” University Health, 938
F.2d at 1221, means that the weakness cannot merely involve poor
financial performance. It must involve a firm no longer able to
access resources that are necessary to compete. See, e.g.,
General Dynamics, 415 U.S. at 501–04 (coal producer had “neither
the possibility of acquiring more reserves nor the ability to
develop deep coal reserves, and thus was not in a position to
increase its reserves”); F.T.C. v. Arch Coal, Inc., 329 F. Supp.
2d 109, 155–57 (D.D.C. 2004) (noting that the acquired firm’s
mines would produce less than they had in the past, and there
were not good prospects for acquiring new mines); Deutsche
Telekom, 439 F. Supp. 3d at 218–24 (wireless provider had “no
clear path to obtaining” necessary assets, including no
alternative acquirer, and therefore had “no convincing prospects
for improvement”) (internal citations omitted). The Defendant
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Airlines presented no evidence that Spirit was in such a dire
financial situation that it had no hope for the future; instead,
multiple Spirit executives testified that the airline had a plan
to return to profitability.
Though their arguments regarding Spirit’s profitability
lack merit, the Defendant Airlines provide strong evidence that
the combined, post-merger airline would be procompetitive and
result in substantial benefits for consumers. This is a so-
called efficiency defense. As one court has noted,
It remains unclear whether and how a court may
consider evidence of a merger's efficiencies. While
the Supreme Court has previously stated that
“[p]ossible economies cannot be used as a defense to
illegality,” F.T.C. v. Procter & Gamble Co., 386 U.S.
568, 580 (1967), lower courts have since considered
whether possible economies might serve not as
justification for an illegal merger but as evidence
that a merger would not actually be illegal. The trend
among lower courts has thus been to recognize or at
least assume that evidence of efficiencies may rebut
the presumption that a merger's effects will be
anticompetitive, even if such evidence could not be
used as a defense to an actually anticompetitive
merger.
Deutsche Telekom, 439 F. Supp. 3d at 207.
Courts have recognized efficiencies in several forms. The
merged firms’ ability to offer new or enhanced services is
itself a procompetitive benefit. See, e.g., Deutsche Telekom,
439 F. Supp. 3d at 207-209 (recognizing efficiencies such as the
accelerated introduction of cellular service based on new
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technology); United States v. M.P.M., Inc., 397 F. Supp. 78, 93
(D. Colo. 1975) (“service offered” by the new firm “was superior
to that offered by either of the previously independent
companies alone”); F.T.C. v. Tenet Health Care Corp., 186 F.3d
1045, 1054-55 (8th Cir. 1999)(explaining that in analysis of
“the competitive effects of the merger” the district court
should have considered evidence that the merger of two smaller
hospitals would create “a hospital that is larger and more
efficient” than the standalone hospitals and that “will provide
better medical care than either of those hospitals could
separately.”). Cost savings and increased output are also
cognizable benefits that demonstrate a merger is procompetitive.
See United States v. Country Lake Foods, Inc., 754 F. Supp. 669,
674 (D. Minn. 1990) (the merger would allow the combined company
to “increase its capacity substantially,” “lower [] costs,” and
achieve “other savings,” enabling it to “compete head-to-head”
with its “top selling” rival).
The Defendant Airlines have demonstrated that an expansion
of all aspects of JetBlue’s business -- including network,
fleet, and loyalty program -- would allow for more vigorous
competition with the Big Four, which carry most passengers in
the country. The size of an airline, the number of routes it
serves, the number of options it offers to consumers -- all of
these aspects add to an airline’s relevance to consumers, and
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were JetBlue to become more relevant, it would immediately place
more pressure on its greatest competitors, the Big Four. This
pressure would benefit consumers. The Defendant Airlines have
also demonstrated that the product JetBlue offers, though more
expensive on average, is higher quality, and provides consumers
with an enhanced flying experience. Were JetBlue to expand via
the proposed acquisition, not only would that product become
more widely available to more consumers, but the increased
revenue available could also allow JetBlue to innovate further
and create an even stronger customer experience.
Overall, the Defendant Airlines have successfully met their
relatively low burden to rebut the Government’s prima facie
case. The combination of the likely, timely entrants into the
harmed markets and the potential procompetitive benefits of the
proposed merger provides the Court with enough substantial
evidence to conclude that the prima facie case may inaccurately
predict the proposed acquisition’s probable effect on future
competition. See Baker Hughes, 908 F.2d at 991.
F. Additional Anticompetitive Effect
The evidence establishing a prima facie case carries
forward even if the presumption is rebutted. The evidence
constituting the prima facie case establishes a “presumption of
the middle ground,” meaning that it establishes the presumed
fact “unless credible evidence is introduced which tends to
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rebut” that fact. Terry v. Electronic Data Sys. Corp., 940 F.
Supp. 378, 381–82 (D. Mass. 1996); accord United States v.
Jessup, 757 F.2d 378, 382–83 (1st Cir. 1985), abrogated on other
grounds by United States v. O’Brien, 895 F.2d 810 (1st Cir.
1990) (discussing this “middle ground position”). Thus, “even
when contrary evidence is presented, prima facie evidence
maintains its force and is accorded any weight that the fact-
finder sees fit.” SEC v. Sargent, 589 F. Supp. 3d 173, 196 &
n.16 (D. Mass. 2022). The Court, therefore, must now carefully
consider all available evidence to determine whether the
Government has proven by a fair preponderance of the evidence
that the acquisition threatens competition. See, e.g., Chicago
Bridge, 534 F.3d at 424 (noting how evidence can both establish
a prima facie case and “serve[] as a redoubt” against rebuttal
evidence offered by defendants); Anthem, 236 F. Supp. 3d at 214–
16 (even where defendant successfully rebutted the presumption
with evidence of entry, plaintiff successfully carried ultimate
burden of persuasion through evidence of anticompetitive
effects).
A merger is unlawful under Section 7 if it is reasonably
probable that it will result in a substantial lessening of
competition in “any line of commerce or in any section of the
country.” 15 U.S.C. § 18. Thus, “if anticompetitive effects of
a merger are probable in ‘any’ significant market,” the merger
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violates Section 7. Brown Shoe, 370 U.S. at 337; see also
Anthem, Inc., 855 F.3d at 368 (threat of anticompetitive effects
in one local market “provides an independent basis for the
injunction” prohibiting merger); Areeda & Hovenkamp ¶ 972a
(“[Section 7] plainly contemplates that mergers may involve more
than one market, yet it bases legality on a separate market-by-
market appraisal.”). “The Government may introduce evidence
which shows that as a result of a merger competition may be
substantially lessened throughout the country, or on the other
hand it may prove that competition may be substantially lessened
only in one or more sections of the country. In either event a
violation of [Section] 7 would be proved.” United States v.
Pabst Brewing Co., 384 U.S. 546, 549 (1966).
Although the Defendant Airlines provide ample evidence at
the rebuttal stage that the anticompetitive harms of the
proposed acquisition will be offset, both by new entries into
the harmed markets and potential pro-competitive benefits, this
evidence fails to establish that the proposed merger would not
substantially lessen competition in at least some of the
relevant markets. Throughout trial, the Government invoked the
experience of the average Spirit consumer: a college student in
Boston hoping to visit her parents in San Juan, Puerto Rico; a
large Boston family planning a vacation to Miami that can only
afford the trip at Spirit’s prices. It is this large category
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consumers, those who must rely on Spirit, that this merger would
harm; the Defendant Airlines, though exceedingly well-
represented, simply cannot demonstrate that these consumers
would avoid harm. Even if other ULCCs entered former Spirit
routes at an unprecedented rate of growth (which, given the
current restraints on airline growth, is unlikely), their entry
is unlikely to be sufficient to protect every consumer, in every
relevant market from harm.
As Dr. Chipty’s analysis demonstrates, it would take five
years for other ULCCs to replace Spirit’s capacity nationally.
Were other ULCCs to attempt to replace Spirit’s capacity
specifically on Spirit routes (and thereby serve Spirit
customers), it would take over fifteen years to do so. To
replace just half of Spirit’s capacity on its Boston routes,
Allegiant, which is receiving Spirit divestitures at
Boston(BOS), would have to grow by 412%. That number rises to
757% for Miami(MIA). Allegiant’s average annual growth rate
from 2013-2022 was 10%; it is not only unlikely, but practically
impossible that its growth rate would increase to the 249%
annual rate Dr. Chipty estimates would be necessary. Frontier’s
average growth rate is not much higher; at 12.8%, the odds of
Frontier growing even over 100% are minimal. Even with other,
new ULCCs growing and expanding and legacy airline expanding
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their basic offerings, there is simply no way such astronomical
need could be supplied.
The Government, therefore, has proven by a fair
preponderance of the evidence that the merger would
substantially lessen competition in a relevant market.
IV. THE INJUNCTIVE REMEDY
In its amended complaint, the Government requested, as a
remedy, that the “Defendants be permanently enjoined and
restrained from carrying out this acquisition, or any other
transaction in any form that would combine JetBlue and Spirit.”
Am. Compl. at 35, ECF No. 69. Such a broad injunction would
prevent not only the proposed merger of JetBlue and Spirit as it
currently stands, but also any future merger of the two
companies. At closing arguments, upon question from the Court,
the Government properly recognized that such a request asks too
much. See Tr. 12/7/2023 51:3-10.54 Today’s decision, therefore,
narrowly applies only to the proposed merger of JetBlue and
Spirit as it currently stands as agreed to by the Defendant
Airlines on July 28, 2022.
“GOVERNMENT COUNSEL: [T]he injunction would be limited to
54
the deal that is presently in front of the Court....
THE COURT: So another deal is another case?
GOVERNMENT COUNSEL: Another deal would be another case, right,
your Honor, I think that’s definitely fair to say.”
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The Government argues that “another bite at the apple”
would be of no use to the Defendant Airlines, and that
therefore, the Court ought enjoin any future combination of the
two airlines. Pl.’s Post-Tr. Br. at 45, ECF No. 451. To rule
in such a way, however, would be prospectively to interfere with
the free market with unknown, and perhaps harmful, competitive
effects. Indeed, the Defendant Airlines and others in the
market, in the context of the unique and dynamic market forces
of the airline industry may decide to take another run at a
merger at any time. The Government will no doubt make its
determination –- as it is duty-bound to do -- as to whether such
a proposed merger sufficiently protects competition. Of course,
while the Court always encourages parties to resolve their
differences without judicial intervention, the courthouse doors
remain open should the Defendant Airlines decide to try again,
and the Government then wishes to prevent such an attempt.
V. CONCLUSION
In sum, the Court has made its best attempt, applying the
law to the evidence in this case, to predict the future of a
dynamic market recovering from the COVID-19 pandemic, in
markedly uncertain times.55 For the reasons set forth above,
As the Court expressed to the parties at the conclusion
55
of trial, this case is an exceptional example of how a complex
antitrust case ought be tried. The Court is grateful and
commends counsel and their staff for their professionalism in
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therefore, the Court rules that the proposed acquisition
violates Section 7 of the Clayton Act.
Spirit is a small airline.
But there are those who love it.
To those dedicated customers of Spirit, this one’s for you.
Why?
Because the Clayton Act, a 109-year-old statute requires
this result –- a statute that continues to deliver for the
American people.
VI. ORDER
In light of the foregoing Findings of Fact and Conclusions
of Law, it is hereby ORDERED that the Defendant Airlines, their
agents, servants, employees, and all persons acting in concert
with either of them, are PERMANENTLY ENJOINED from executing the
proposed merger as agreed on July 28, 2022.
SO ORDERED.
/s/ William G. Young_
WILLIAM G. YOUNG
JUDGE
of the
UNITED STATES56
robustly and efficiently presenting their respective cases to
the Court.
56 This is how my predecessor, Peleg Sprague (D. Mass. 1841-
1865), would sign official documents. Now that I’m a Senior
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Case 1:23-cv-10511-WGY Document 461 Filed 01/16/24 Page 113 of 113
District Judge I adopt this format in honor of all the judicial
colleagues, state and federal, with whom I have had the
privilege to serve over the past 45 years.
[110]
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