JetBlue admits Spirit merger would raise fares, court filings allege, putting union in legal peril

JetBlue admits that its merger with Spirit Airlines would lead to higher fares as it retrofits Spirit's aircraft as its own, the plaintiffs in a lawsuit opposing the merger allege.

The plaintiffs, about two dozen passengers and travel agents, are suing the airline in Massachusetts federal District Court to prevent the merger. This parallels the Justice Department's (DOJ) own antitrust suit challenging the merger.

In a court filing on Tuesday arguing against the airlines' request for a summary judgment in the case, the plaintiffs cited various testimony and internal documents from the airlines. The documents appear to state that the merger would lead to higher airfare on Spirit flights and potentially elsewhere across the domestic travel market.

Parts of the filing with the admissions were supposed to be redacted from public view, pending the trial, under a protective order. However, a formatting error in the document, which was uploaded to the publicly viewable court docket, temporarily allowed readers to copy the redacted text and paste it into another document as readable print.

The improper redaction and the contents of the document were first reported by the legal news service Law360.

According to the plaintiff's filing, "JetBlue plans to increase fares on aircraft it acquires from Spirit by at least 24%" as a conservative estimate; it added that "fare increases may be as high as 40%."

The "Defendants' own admissions provide an astounding quality of direct evidence that the merger not only threatens anticompetitive harm, it will almost assuredly result in it," the plaintiffs argue in the document, citing "higher prices, reduced output, the elimination of choice in a vibrant rival, and the diminution of service quality, among other harms."

JetBlue further "acknowledges that Spirit's exit from a route results in market-wide price increases of all other airlines serving that route by 30%," according to the plaintiffs in one of the improperly redacted sections; it also alleges that JetBlue has admitted that the merger would lead to some customers no longer being able to afford air travel.

JetBlue's "own estimates suggest the elimination of Spirit will result in large percentages of Spirit's current customer base...foregoing flights altogether," the plaintiffs wrote. "JetBlue estimates Spirit's entry into markets stimulates increases of 18% to 36% in new passengers."

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In a statement provided to TPG, a JetBlue spokesperson said that the effectively unredacted statements in the filing were missing context and not wholly representative of the situation.

"Private plaintiffs' counsel failed to properly redact certain information which, taken out of context, creates a completely inaccurate picture of the facts. We are confident that our merger with Spirit will give a much-needed boost to airline competition in the U.S. and result in more low fares and higher-quality service for customers," the statement read.

"We look forward to laying out all of the evidence to support our case this October."

The DOJ's suit alleges that the merger would lead to higher fares, partly by removing Spirit's competitive pricing from the market and allowing other airlines to raise fares on routes Spirit operates.

Meanwhile, JetBlue has defended the proposed merger by arguing that a stronger, combined JetBlue and Spirit could compete more effectively against the four main domestic carriers — American Airlines, Delta Air Lines, Southwest Airlines and United Airlines — that control roughly 80% of the air travel market share.

Related: Anti-competitive or pro-consumer? American, JetBlue square off with DOJ in antitrust trial

Should the material cited in the consumers' case and revealed in the court filing be introduced by the DOJ as evidence as well, it suggests that the government would have a strong argument to counter JetBlue's defense.

JetBlue recently began the process of unwinding an alliance with American after their partnership was ruled anticompetitive in another suit brought by the DOJ. JetBlue said it would decline to appeal, instead focusing on the merger with Spirit under the assumption that without American's alliance, the path to approval for the Spirit merger would be clearer.

The travelers' case was originally filed in California but transferred to Massachusetts to be in the same court as the DOJ antitrust suit. JetBlue provided the referenced material during the suit's discovery process, which was under a protective order, according to Law360.

Neither the plaintiffs' counsel nor representatives for Spirit immediately returned TPG's request for comment. Law360 reported that lawyers for the plaintiffs and for Spirit asked the outlet not to publish the improperly redacted material. Still, the outlet reported on it because the information was "relevant to a merger of great public interest."