AAI Outlines Frontier-Spirit Airlines Merger Concerns With Law360

In Law360’s February 8, 2022 article “Frontier-Spirit Airlines Merger May Test Biden Antitrust Mettle,” AAI President Diana Moss shares her concerns about the proposed merger of Frontier and Spirit airlines.

From the article:

Meanwhile, skeptics implored the Biden administration to more thoroughly scrutinize the merger, saying it would actually eliminate important competition. Some suggested that the combined Frontier and Spirit airline would have a stronger incentive to simply “go along” with the pricing and policies of the big four rather than competing more effectively as a larger airline.

“It should get a hard look by the DOJ, and this will be a test of the Biden administration’s hard stance on protecting competition,” Diana L. Moss, president of the American Antitrust Institute, said Monday. “Frontier and Spirit, as ultra-low-cost carriers, inject important competitive discipline into domestic passenger markets. Without that dynamic, the ‘big four’ will be even less restrained in coordinating to set fares, ancillary fees and quality of service. There is plenty of evidence that the ‘big four’ signal each other to keep capacity tight and fares high, as well as antitrust concerns over ancillary fees.”

Additionally, the COVID-19 pandemic should not justify a pass allowing this merger, according to Moss.

“As a matter of policy, merger enforcement is forward-looking and should not create an anticompetitive legacy for consumers based on exogenous events. Moreover, the ultra-low-cost carriers have done well — much better than the legacies and Southwest — over the last couple of years. Finally, the record on benefits from airline mergers is sketchy, at best. Efficiencies are often overestimated and never materialize, or materialize much later than promised. Another reason for enforcement skepticism.”