Congratulations, JetBlue. I think.
In a bidding war that even Pyrrhus may have had doubts about, JetBlue looks like it is going to win (a term that I use loosely) Spirit Airlines after Frontier announced that it was dropping its bid for Spirit on Thursday. All that’s left now is the wedding.
JetBlue may have wanted Virgin America in 2016 for transcontinental dominance, but it will settle for buying Spirit and building up the east coast.
The JetBlue/Spirit combination will be the fifth largest carrier in the US, with 9-10% market share. Not bad, although without the international presence that American, United and Delta have, it still has challenges. And that’s if the merger even gets DOJ approval, which is not a certainty.
If the merger does go through, there will be an interesting mix of winners and losers (other than the traveling public, which almost always loses when airlines merge. Tant pis.). Let’s take a look.
A merger between Frontier and Spirit could have been an airline unicorn: one that helped travelers, or at least didn’t hurt them too much. Two major ultra-low cost carriers (ULCCs) would have had the gates and the coverage to create a true national ULCC.
Could it have brought a true Ryanair approach to the USA?
But even without the merger, Frontier will probably get what it wants. JetBlue is going to redesign Spirit in its own image, meaning that costs will rise, potentially significantly.
Frontier will likely be the only one left with a bare bones cost structure (ignoring a handful of tiny competitors). Low airline costs equals low tickets, and Frontier may be able to accelerate its expansion eastward, without the messy integration process.
Of course, JetBlue could surprise us 🙂
I was surprised to see that Southwest Airlines stock was down more than 6% last Thursday. The market’s perception may be that a JetBlue/Spirit combination will be a formidable competitor for Southwest.
That’s probably true, but it doesn’t create the national ULCC that a Spirit/Frontier merger would have. Since some sort of merger was almost a foregone conclusion, Southwest should benefit from getting the “better” one.
Plus, Southwest has robust loyalty via an excellent credit card and program offering. Their core members aren’t as fickle, and that’s extra true because they go directly to Southwest.com to book fares.
“Mayor Pete” — Pete Buttigieg, Secretary of Transportation
The Secretary of Transportation is going to be a particularly high-profile player in this saga. If Secretary Buttigieg has ambitions for higher office, airline consolidation might be an opportunity for him to show off leadership potential.
What that means to you, or to me, may be different.
Granted, the two airlines won’t be combined anytime soon, so we can hope that the worst summer in at least two decades will be over sometime soon. But JetBlue and Spirit are both, sadly, bottom of the barrel when it comes to operational reliability, and the combination of the two will be a nightmare.
That’s statistically speaking, not anecdotally.
Unlike the network carriers, who can route you through any number of hubs, JetBlue and Spirit tend to do a lot of point-to-point, with only a couple of flights per day. Good luck getting them to put you on another carrier if something goes wrong.
The counter to this could be price. JetBlue may learn how to shave even more, without truly compromising experience, which could lead to deals. People L-O-V-E- deals. I am living proof!
Poor American. It’s rare that you’ll hear me say that. The DOJ is currently suing the Northeast Alliance (the partnership between JetBlue and American) and JetBlue’s attempt to acquire Spirit will inevitably lead to another suit.
It’s hard to view one without looking at the other, b in the case of a conflict, American is clearly a less important partner than Spirit. The DOJ is “special”, at best.
Because making fun of Spirit Airlines has always been a blogger fallback when looking for something to write about, there should be new fodder and fun.
A combined carrier will certainly offer more than enough opportunities for irony early on, but what happens if they eventually get it right? We’ll be left with nothing to write about. This will be fun to watch.