Back in February 2023, Rachel Chiu wrote an article for Capital Matters in which she questioned the Biden administration’s opposition to the takeover by JetBlue of Spirit Airlines:
The companies announced in October that stockholders approved the $3.8 billion deal. Although the transaction depended upon the required assent from regulators, Spirit and JetBlue anticipated that they would allow the deal to close by the end of the first half of 2024, at the latest. JetBlue offered to divest from all of Spirit’s assets in New York and Boston, along with five gates in Fort Lauderdale, to prevent the airline from commandeering these regions. However, the divestiture commitments failed to appease the Biden administration, and according to JetBlue’s CEO, Robin Hayes, the DOJ staff “came to the table with their minds made up.”
It is unreasonable to expect new entrants and small players to achieve economies of scale exclusively through their own means. The DOJ acknowledges that prohibitive barriers exist in the airline industry, yet describes Spirit as a company that can overcome it all: “Spirit has doubled its network in size and, before this deal, [was] expected to continue expanding at a quick pace. The acquisition stops this future competition before it starts.” While it is true that the ultra-low-cost carrier has found success within its niche, it is not enough to support the assumption that Spirit would become “future competition” for established carriers.
The DOJ argues that it is trying to “preserve Spirit’s unique and disruptive role” from being diminished by the “rest of the industry — including JetBlue — [which] has been forced to respond to Spirit’s innovations and low prices…”
The state, you see, knew better than shareholders. And the state had plans for Spirit. This was the new model antitrust of the Lina Khan era, the reworking of antitrust away from a focus on consumer welfare and toward a device to reshaping the economy, inspired in part by a neo-Brandeisian fear of “bigness.” Paranoia and top-down diktats are not normally a good way to run an economy, although Khan has won the admiration of the “Khanservatives,” big government types such as Missouri Senator Josh Hawley.
How did it work out?
Spirit Airlines filed for bankruptcy protection Monday, as mounting losses, unaffordable debt, increased competition for bargain-seeking airline passengers and the inability to merge with other airlines left it little choice
Central planning is what it is.