JetBlue Announces a Deal To Buy Spirit Airlines. Fares Could Surge

JetBlue Airways on Thursday announced it would purchase Spirit Airlines, a combination that would create America's fifth-largest airline. From a report: The announcement comes a day after Spirit pulled the plug on a deal to merge with Frontier. JetBlue had been pursuing a hostile bid for Spirit even while Spirit sought shareholder approval for a lower-priced deal with Frontier. Spirit had continually expressed concern whether regulators would approve a deal with JetBlue. But shareholders had balked at accepting Frontier's less-valuable cash-and-stock offer when they had JetBlue's all-cash offer on the table. JetBlue CEO Robin Hayes said the deal will be fruitful for investors and passengers. "We are excited to deliver this compelling combination that turbocharges our strategic growth, enabling JetBlue to bring our unique blend of low fares and exceptional service to more customers, on more routes," he said in a statement. The companies said the deal is worth $3.8 billion.

Could?

[DarkRookie2]

Change that to a will.
Any excuse a business to find to raise prices they will take.

Re: Could?

[klipclop]

Or subsidized plane tickets are going away. I think that the industry has been a race to the bottom, and the bottom is here... I'd rather pay a little more if I could get good service and have a good experience on the flight. Raising ticket prices should also price out the unwashed masses who always cause a ruckus making flight attendants lives miserable.

Re:

[dfm3]

Sadly it's a lot more complicated than just ticket price. In my experience:

1) There's a strong correlation between customer behavior and time/destination. The worst flight I've ever been on was a Delta flight from Atlanta to Las Vegas on a Friday afternoon... nice big plane, and great flight crew who had to put up with all the raucous dudebros and woo girls trying to get as drunk as they could. Same thing if I travel to central Florida; I always choose Allegiant to St. Pete over a larger carrier to Orland

Re:

[LostMyAccount]

I wonder if any of the airlines have ever modeled the savings from eliminating the bottom feeder flyers. I almost exclusively fly Delta because my airport is a Delta hub and thus we can fly direct to nearly any destination, and it does seem like the bottom feeders contribute to slow boarding and deplaning, but generally I don't think they're excessively disruptive on the flights I've been on.

But it could be those types of flyers are already priced out of Delta and flying JetBlue or Spirit.

People Buy On Price

[WankerWeasel]

While people say they care about on-time service, legroom, and all these other things, time and time again shows people traveling for pleasure buy for price over all. The only reason leisure travelers get a decent rate on a non-budget airline is because business flyers are willing to pay more for the time/date they have to have and their businesses are willing to pay more for better seating for them. This deal means nothing to the business traveler, but may hit those who use Spirit for their low prices, despite their horrid service.

Re:

[Geoffrey.landis]

While people say they care about on-time service, legroom, and all these other things, time and time again shows people traveling for pleasure buy for price over all.

Yep, that's what Spirit counts on. Service means nothing; lousy service sells if the price is low.

I used to think JetBlue a step up, but I got stranded by them at 2AM in Fort Lauderdale a few years ago, and no longer am willing to take a chance.

Re:

[supremebob]

Honestly, Sprint is only cheaper if you're one of those people who can somehow cram 5 days worth of clothing into a backpack small enough to be considered a "carry-on" item.

Otherwise, they're going to nickel and dime you with enough luggage charges coming and going that you would be better off paying more for a traditional domestic flight upfront.

Re:

[aaarrrgggh]

The masses buy on price, but the customers they chase buy on value. Value can be many different things to different people.

Re:

[LostMyAccount]

The least experienced flyers tend to chase low prices. You can get awful experiences an all airlines these days due to staffing problems, but more often than not the more expensive carriers tend to provide a better experience with fewer complications.

Re:People Buy On Price

[jacks smirking reven]

Part of me feels like this is at least partly a self created problem due to the labyrinthine system of fare prices where the act of purchasing a ticket feels like you are unwillinngly participated in a sadistic PHD students game theory experiment.

If fares were more consistent and predictable I think maybe people could adapt their value systems around air travel a bit better but since people have no way to predict what it's "worth" people are in constant fear of paying too much so even when they get a fair market price they don't even know it. Historical fare data only goes so far.

Re:People Buy On Price

[Voyager529]

Part of me feels like this is at least partly a self created problem due to the labyrinthine system of fare prices where the act of purchasing a ticket feels like you are unwillinngly participated in a sadistic PHD students game theory experiment.

I think this is half of it, with the other half being that paying more for a 'full service' airline isn't necessarily going to give some peace of mind that such hassles will be avoided.

Back in February, I was flying from Kennedy (NYC) to San Pedro Sula (Honduras). There was only one flight a day with this itinerary with Delta, and I understood that - SPS isn't exactly Heathrow or LAX or Frankfurt, and naturally, there was a connecting flight through Atlanta (they had to Deliever Everybody's Luggage To Atlanta, after all), and of course, the flight was taking off around 7AM, so the Red Eye Shuffle it was.

At around 5AM (i.e. around when they want you at the airport), Delta e-mailed me, informing me that my flight to Atlanta was rescheduled for a 10AM departure. I found this rather impressive, as the only SPS flight going from Atlanta to SPS was departing at 9:45. So, I spoke to a customer service rep, whose sole remedy seemed to point me to the customer service phone to wait on hold to speak with a rep in the customer service center, which made me wonder what that particular CSR brought to the table that a cardboard sign couldn't equally perform...but I digress. They said, "oh, we'll get you on tomorrow's flight", as if somehow I was going to be okay with spending 36 hours straight at an airport. She then directed me to a different customer service desk, where I told my story to a different rep, who then directed me to sit at a different gate "just in case they were able to find a pilot in time" (I kid you not). That rep did, ultimately, work things out so I was able to take a Delta flight to Miami, and she cross-booked me for an American Airlines flight to SPS, arriving 9 hours after my scheduled departure time, and that was a step up from having to shower at an airport. As a sidebar, I booked a first class seat for all four legs of the trip, but only ended up sitting in First Class for one of them, and I didn't get any reimbursement for the difference.

In this particular case, the answer is "Spirit and Frontier don't do international flights", but the place I had an issue was the domestic half of the flight. It's something as simple as making sure that every CSR at the airport can do whatever the hell it takes to get a passenger from point A to point B, rather than having to speak to three different reps who all told me different things. Arrival and departure delays happen, I get that, but it's as simple as making me feel like there's a chance in hell the airline will either hold up their end of the bargain and get me where I need to go, or that they're going to spring for food and a hotel without me having to spend four hours on the phone working out the logistics of doing so.

If Delta and other full service carriers can't figure that out, then yeah, there's an appeal to spending half the price for the same experience.

Re:People Buy On Price

[Tony Isaac]

Many people do buy based on price, but Spirit and Frontier found the low point beyond which a lot of customers would not go. I know many people who agree with me that we will never fly on those two airlines given a choice, even if it would save us money. The experience of flying on those airlines is so bad, it's worth paying a little more to fly on another airline.

Re:

[adrn01]

Frangela's "Idiot of the Week" podcasts have had a number of incidents occurring on Spirit Airlines. Frequently enough that they have concluded that if you fly Spirit, you should probably *expect* something stupid and idiotic to happen. https://frangela.com/category/... [frangela.com]

Re:

[WankerWeasel]

And yet, consumer studies have shown that even the people who say they'll never fly Spirit or Frontier again do so when it comes time to buy. There's a difference between saying they'll never do it and actually not. When they see the price difference, they just can't resist the savings.

Re:

[Tony Isaac]

I'm sure that some portion of my friends would, when push comes to shove, choose Spirit or Frontier because it's cheaper. But I can speak for myself, I definitely would not, and I've made exactly that choice numerous times. In my opinion, the prices are actually not really cheaper once you pay for your carry-on, your seat selection, your turn at the commode, etc.

Re:

[WankerWeasel]

That's great. But you're allowing bias to influence you here. You then do not represent the vast majority of air travelers. You're in a very very small minority.

Re:

[Tony Isaac]

I don't know how vast that majority really is, considering that Spirit has about 4.9% of the market, and Frontier has about 3.3%.

https://www.statista.com/stati... [statista.com]

Re:

[WankerWeasel]

This would include the fact that when people book for recreational travel on all airlines, they go for the most basic seating, only occasionally paying for extras like selecting their seat, rather than Economy Plus or comfort or whatever the particular airline refers to upgraded seating as.

Re:

[Tony Isaac]

You don't seem to have been flying much lately. Economy Plus sections are getting larger, not smaller. Some people do choose "Basic Economy" but the proportion is small.

Re:

[WankerWeasel]

And the basic economy sells out first. People go with Economy Plus because they can't get the cheaper basic economy. Forcing folks into more expensive seating in order to increase profits. Imagine that.

Re:

[account_deleted]

Comment removed based on user account deletion

Re: People Buy On Price

[LindleyF]

That's not really true. There is definitely a difference in comfort between SOME airlines. JetBlue is known for free in-flight TV, for instance. And the whole Economy Plus fare class is a real difference at an affordable up charge.

Re:

[mjwx]

While people say they care about on-time service, legroom, and all these other things, time and time again shows people traveling for pleasure buy for price over all.

The problem with that reasoning is, show me a "full service" airline that isn't acting like a budget airline. In the olden days (and by that I mean less than 10 years ago) full service meant you got luggage, seat selection, food and drinks included as standard. It justified the premium. Now not even Singapore still offers free seat selection (although it's pretty cheap at US$12.60 for the longest legs).

I'm someone who pays extra for full service as I tend to fly long haul a lot. However if I'm getting bu

Re:

[WankerWeasel]

Show you a full service airline? Any of the major names in the US for example. Delta, America, even United. You just have to pay for business or first class and stop being cheap. These airlines are catering to the majority of travelers, who want low prices over everything. Consumer demand is what drives it. If people weren't more likely to buy the cheapest ticket they could find and would rather have all the perks like meals, legroom, and more, the airlines would cater to that instead.

Which fares?

[virtig01]

Due to the "JetBlue effect", fares drop when JetBlue enters a market that is served by the Big Four airlines. Even if you don't fly JetBlue, you benefit, since the incumbents cut prices to remain competitive. So having JetBlue in new markets is a positive for customers, and this deal allows JetBlue to enter more markets.

Yes, there also exists a "Spirit effect" that reduces fares too, but it's less impactful than with JetBlue. This may seem counterintuitive, but frankly, fewer customers see Spirit as an alte

Re:

[FuegoFuerte]

I used JetBlue to get some guests to my wedding... they have a lot going for them, and if I didn't live in the hub city of another airline I would very probably fly them.

Sadly, if they're buying Spirit, it reduces my options for at least one common destination I fly to (about once/year for the last several years) from 3 to 2. It used to be served by Delta, American, JetBlue and Spirit, but Delta dropped the route a couple years ago. If this goes through, it seems my choices will be down to American and Je

FTC should kill this

[jacks smirking reven]

I am personally biased because I like Jetblue and have flown them a lot and I don't want Spirit infecting what I feel is a good service. This feels a lot like when McDonnell "merged" with Boeing but Boeing ended up with the shit leadership in charge and look where they are today. Maybe I am off base here.

If Spirit can't survive without a merger then force them to take the Frontier deal which makes a lot more sense to be honest. The shareholders want the Jetblue deal simply because it puts more money in their pockets. If its worse for consumers they should be told to sod off, they still get "most of the money", they don't have a right to "all of the money".

Re:

[Vancorps]

I used to really like Jet Blue. The last time I flew I was able to fly Jet Blue on the way out, but ended up on JetBlue operated by American flying back and even though it was all booked through JetBlue.com we had this pseudo reservation which prevented all of us from checking into our flights. My parents almost missed their flight because they didn't have the reservation in their system. If this was early 2000s I could see this kind of crap happening but there is no reason a flight booked 6 months in advan

Re:

[jacks smirking reven]

I've never had a reservation issue with them but I can definitely see that souring you. Especially as all airlines now do the "seat assigned" at check in type deal.

That said the screens on their original A320 planes are definitely showing their age and I have had a few not work and especially find the headphone jacks are worn out in alot of the seats. The newer A321/A220 models are obviously much better in that regard. The inbuilt screens was definitely the selling point that got me booking with them ori

Re:

[NoWayNoShapeNoForm]

I am personally biased because I like Jetblue and have flown them a lot and I don't want Spirit infecting what I feel is a good service.

Perhaps JetBlue should rename the merged Spirit assets as Aqua - not quite a Blue and not really a Jet.

That way passengers will see a clear delineation between the quality of JetBlue and the Greyhound bus-like airline that Spirit really is.

And in the long run...JetBlue gets the routes, gates, and landing-takeoff spots that Spirit once had while it can quietly consider phasing out Aqua when ready.

Re:

[ghoul]

Actually Shareholders do "have a right to all the money" They by definition are the only ones with a "share" of the money. Everyone else is a bystander. Customers can vote with their wallets after the merger but they have no say in the merger itself.

Re: FTC should kill this

[jacks smirking reven]

I mean In the sense that if JetBlue offers $44 and Frontier offers $38 and the FTC says the JetBlue offer is unworkable for consumer they can shoot it down and shareholder have a right to all the money from sale but not a right to a certain price.

Fruitful? How about doubtful...

[Pascoea]

...the deal will be fruitful for investors and passengers.

You don't get both. You guys all place your bets on who it will be more "fruitful" for. My money sure as hell isn't going on "passengers".

Re:

[NotEmmanuelGoldstein]

... isn't going on "passengers".

One of the side-effects of capitalism (level-market competition and efficient supply) is everybody benefits. (What 'invisible hand' really means.) If that's not happening, then the basic principles of capitalism don't exist. Markets dominated by corporations can be described as winner-takes-all capitalism.

Re:

[Richard_at_work]

Actually it probably will end up with some positives for the passengers, as due to the dumb ass backward way that "capitalist" America works with regard to passenger air travel, airlines have to apply to several bodies in order to open a route up or expand one - so there are going to be routes which either Spirit flies or JetBlue flies but not both. Those routes are now part of a single network covered by the merged company - route expansion without having to deal with the FAA, DOT and local bodies, just t

Re:

[Pascoea]

I appreciate your optimism.

This Affects IT, How?

[BrendaEM]

Misplaced article.

Awesome

[CoolDiscoRex]

I cannot wait to bail them out!

Was looking at flights recently.

[thrasher thetic]

Going on a trip to Dallas for an old-man hockey tourney in October. Even with gas as expensive as it is, it is still cheaper than the cheapest airfare for me to DRIVE the 900 miles AND I'd be able to take all my gear at no additional cost.