AAI Letter to DOJ Says Merger of Ultra-Low-Cost Carriers Spirit and Frontier Risks Higher Fares and Ancillary Fees, and Lower Service Quality

AAI sent a letter to Jonathan Kanter, AAG, U.S. Department of Justice Antitrust Division to present analysis supporting the concern that the proposed merger of Spirit Airlines and Frontier Airlines eliminates important competition at the national level and in numerous airport-pair markets for scheduled air passenger service. The threatened loss of competition would likely be felt by consumers in the form of higher airfares, higher ancillary fees, and lower quality service. Moreover, AAI analysis based on publicly available information casts serious doubt on Spirit-Frontier’s efficiency claims, and notes that remedial slot and gate divestitures used in past airline mergers are unlikely to be effective. AAI’s letter urges the DOJ to carefully consider moving to block the merger.

The letter explains that the proposed merger is the first merger of two major U.S. ultra-low-cost (ULC) airlines. ULC carriers operate different airline networks and employ different revenue models than the legacy airlines that have featured in previous major mergers. Spirit and Frontier have a demonstrated track record of inconsistent exit and entry in airport-pair markets and poor service quality. Moreover, the two carriers serve price-sensitive consumers that are often traveling to and from destinations where there is no choice of airport and little choice of alternative carriers. These unique features pose novel challenges for the Antitrust Division’s review of the merger.