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JetBlue Airways buys Spirit Airlines. Fares could skyrocket.

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The purchase of Spirit Airlines by JetBlue Airways is officially announced. Fares may rise sharply.

On Thursday, JetBlue Airways announced that it would acquire Spirit Airlines, creating the fifth-largest airline in the United States.

Spirit withdrew out of a merger with Frontier the day before the news was made.

Even as Spirit sought shareholder approval for a lower-priced arrangement with Frontier, JetBlue was pursuing a hostile takeover bid for the airline.

Before JetBlue, Spirit feared regulators. Frontier’s cash-and-stock offer was more appealing than JetBlue’s all-cash offer.
Increases in airline fares

It’s possible the transaction may lead to higher rates across the sector, according to analysts.

A Frontier-Spirit merger, on the other hand, would have combined two carriers with extremely cheap base rates. Both airlines do not offer first or business class seats.

Spirit and Frontier regularly drive big carriers like American (AAL), United (UAL), and Delta (DAL) to increase basic economy fare availability.

Spirit and Frontier have cheaper fares, yet JetBlue claims to be cheaper than network carriers. JetBlue plans to add first-class seats if it buys Spirit.

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