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Bad for travelers: Why I'd hate to see a Spirit and JetBlue merger

April 11, 2022
4 min read
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This viewpoint from TPG's founder Brian Kelly was first published in his weekly email.

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What I love about the travel industry is that there’s never a dull moment. Every week something is happening, whether it’s passengers misbehaving, operational meltdowns or cool new route announcements.

This week in mergers and acquisitions news, JetBlue Airways announced that it wants to acquire Spirit Airlines for $3.6 billion, all cash.

Say what?

Spirit and Frontier Airlines already announced plans in February to merge. JetBlue’s unsolicited offer certainly throws a wrench into those plans.

But I’m not convinced that they’ll call off their deal or that Spirit will merge with JetBlue, for a couple of different reasons.

Spirit and JetBlue are too different

JetBlue and Spirit have completely different business models: JetBlue focuses on more premium experiences, including free snacks, Wi-Fi and its Mint business-class product — which I love. Spirit is admittedly no-frills; that’s what people like about it. Spirit and Frontier are much more similar in their business models.

Then there is the issue of Florida. Spirit is based there and JetBlue has a huge presence in the Sunshine State and runs all of its crew training out of Orlando. That might be a major issue for the Department of Justice.

And we can’t forget that JetBlue is still full-steam ahead on its partnership with American Airlines, which has already received some question marks from regulators. So will the government actually approve the American partnership and the Spirit acquisition? My gut says no and that if JetBlue has to choose between its partnership with American and one with Spirit, it would definitely stick with American because it’s a more similarly aligned airline.

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I think this is more about slowing down the Frontier deal and making it more costly. Frontier and Spirit will need to come up with better terms for their shareholders since this $3.6 billion deal from JetBlue looks really good on the surface.

Would this merger be good for consumers?

That’s the No. 1 question I’m being asked and simply put, my answer would be no.

If JetBlue acquires Spirit, you would have two wildly different experiences within one airline and nobody wants that. When Alaska Airlines bought Virgin America, the Virgin America brand that everyone loved so much quickly went away. And when Delta Air Lines acquired Northwest Airlines in 2008, the latter had a very robust frequent flyer program and a loyal audience. Although Delta’s inflight experience was better, consumers saw the value of their miles degrade over time.

In general, with less competition comes less of an incentive for airlines to offer consumer-friendly products and prices — though, to be fair, airfare hasn’t risen that dramatically in the United States over the last decade.

It seems like everybody likes to dis Spirit Airlines for one reason or another but it’s quite profitable and people like flying Spirit to save money. If JetBlue were to take over and the Spirit brand were to live on, the ultra-low-cost nature of Spirit would certainly be diluted. Now would that mean a better experience? Probably. But it would also likely mean higher fares as well and that’s not what Spirit’s frequent flyers are looking for. Spirit has a corner on the market because some people just want to go from point A to point B and don’t care about free Dunkin’ coffee.

It will be interesting to see how this plays out. My gut says that this merger won’t actually happen, but never say never.

Featured image by AFP via Getty Images
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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Apply for American Express® Gold Card
at American Express's secure site
Terms & restrictions apply. See rates & fees
Best for the well-traveled foodie
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

4XEarn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S.
4XEarn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
3XEarn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
  • Intro Offer
    Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.

    60,000 bonus points
  • Annual Fee

    $250
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
    Excellent/Good

Why We Chose It

There's a lot to love about the Amex Gold card. It's been a fan favorite during the pandemic because of its fantastic rewards rate on restaurants (that includes takeout and delivery in the U.S.!) and U.S. supermarkets. If you're hitting the skies soon, you'll also earn bonus points on travel. Paired with up to $120 in Uber Cash (for U.S. Uber rides or Uber Eats orders) and up to $120 in annual dining statement credits at eligible partners, there's no reason that the foodie shouldn't add this card to their wallet. Enrollment required.

Pros

  • 4x on dining at restaurants and U.S. supermarkets (on the first $25,000 in purchases per calendar year; then 1x)
  • 3x on flights booked directly with the airline or with Amex Travel
  • Welcome bonus of 60,000 points after spending $4,000 in the first six months

Cons

  • Weak on travel outside of flights and everyday spending bonus categories
  • Not as useful for those living outside the U.S.
  • Some may have trouble using Uber/food credits
  • Few travel perks and protections
  • Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.
  • Earn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S., and earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
  • Earn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
  • $120 Uber Cash on Gold: Add your Gold Card to your Uber account and each month automatically get $10 in Uber Cash for Uber Eats orders or Uber rides in the U.S., totaling up to $120 per year.
  • $120 Dining Credit: Satisfy your cravings and earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, Milk Bar and select Shake Shack locations. Enrollment required.
  • Choose the color that suits your style. Gold or Rose Gold.
  • No Foreign Transaction Fees.
  • Annual Fee is $250.
  • Terms Apply.
  • See Rates & Fees