The Atlantic - The Spirit Airlines Paradox
Policy Director Phillip Longman highlights the need for price regulation in the airline industry alongside the milestone decision by a federal judge to block JetBlue’s acquisition of Spirit Airlines.
Read one way, the decision this week by a federal judge to block JetBlue’s acquisition of Spirit Airlines is a milestone in the effort to revive American antitrust law. President Joe Biden has made competition enforcement a central part of his economic policy, and the JetBlue ruling marks the first time that federal regulators have ever won a lawsuit to stop a major U.S. airline merger. In his opinion, William G. Young—who was appointed by Ronald Reagan in 1985—explains in admirably plain language that absorbing Spirit would allow JetBlue to raise prices and reduce service on the routes where the two airlines currently compete. This would violate the federal Clayton Act—“a statute,” Young wrote, “that continues to deliver for the American people.”
Yet Young’s decision also inadvertently struck an odd note—one that hints at the limits of what antitrust enforcement alone can do to improve air travel. “Spirit is a small airline,” he wrote. “But there are those who love it. To those dedicated customers of Spirit, this one’s for you.”
Really? No doubt Spirit has its admirers. And by offering super-low fares, it has expanded access to air travel for many customers. But it has also long been seen as the epitome of everything that’s gone wrong with flying, a leader in an industry-wide race to the bottom. Always on the brink of insolvency, the airline’s never-ending search for cost savings has made it notorious for pioneering unpopular practices such as restricting refunds, shrinking seats, and, most controversially, charging for even the most basic amenities. It tends to show up near the bottom of on-time-arrival rates and near the top of the consumer-complaint rankings, according to the U.S. Department of Transportation. Maybe, as Young reasoned, competition from Spirit keeps other airlines’ nominal ticket prices lower than they otherwise would be. But it has also helped normalize loss of quality throughout the industry, which must be factored into the true cost of flying.
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