After pressure on the Transportation Department from a group of legislators to block the proposed Frontier-Spirit merger, Frontier Airlines CEO Barry Biffle says it will be a consumer-friendly move.
Frontier Airlines chief executive Barry Biffle is defending the proposed merger of his airline with Spirit Airlines to the public, after a group of lawmakers led by Sen. Elizabeth Warren (D-MA) petitioned to block the move.
The leader of the Denver-based airline spoke to Yahoo Finance on March 29, 2022, claiming the move was a good deal for consumers and investors.
“The Idea That We Would Raise Prices is Just Absurd”
Frontier and Spirit announced their intention to merge into a giant ultra-low-cost-carrier in February 2022. When it was unveiled, the two carriers said the combined airline would be able to serve more communities with international access with lower fares than the other major U.S.-based airlines.
However, a group of lawmakers aren’t buying the low-price promises. Warren, along with two other senators and nine representatives, sent a letter to both the U.S. Department of Justice and Department of Transportation, expressing concern that the move would ultimately harm air travel consumers. Signing onto the letter were Sen. Bernie Sanders (I-VT), Rep. Rashida Tlaib (D-MI) and Rep. Alexandria Ocasio-Cortez (D-NY).
“For decades, the airline industry has been plagued by increasing consolidation, producing massive airline giants while leaving consumers and workers behind,” the letter reads. “Because the proposed Spirit-Frontier merger threatens to exacerbate these trends—including by potentially increasing prices during a period of high inflationary pressure—we urge the Department of Justice (DOJ) and the Department of Transportation (DOT) to closely review this mega merger for potential violations of the Clayton Act and for concerns under 49 U.S.C. § 41105 and to oppose it if you determine it will threaten competition in the airline industry or ‘the public interest.’”
In comments to Yahoo Finance, Biffle claimed the lawmakers were incorrect in their assertion. Instead, he drew an allegory between the Frontier-Spirit merger with “Walmart merging with a dollar store to raise prices.”
“This merger will create a very large, low-cost carrier with true nationwide capabilities and provide more low fares to more people and places,” Biffle told Yahoo Finance. “The facts just support that when left to our own devices, we actually have very low fares. So the idea that we would raise prices is just absurd.”
Biffle also asserted that the members of Congress were wrong, because this action would combine two ultra-low-cost carriers instead of further consolidating the main airlines. The last time two “discount” airlines merged was in 2011, when Southwest Airlines purchased AirTran Airways. The brand was ultimately united under the Southwest banner in 2012.
Merger Still Needs to Clear Regulatory Hurdles
Before Frontier and Spirit can begin transitioning into one company, the deal must clear review from both the Justice Department and Transportation Department. While labor unions have stayed neutral on the matter, recent precedent suggests the merger could come under additional scrutiny, after the DOJ sued American Airlines and JetBlue to breakup their Northeast Alliance.
Feature image courtesy: Frontier Airlines & Spirit Airlines