Current enforcers should treat Spirit Airlines not as a mere talking point against the Biden administration but also as a cautionary tale.
Current enforcers should treat Spirit Airlines not as a mere talking point against the Biden administration but also as a cautionary tale.
S hort of praising the Met Gala, it’s hard to think of a more controversial thing you could do online than defend big business. The left has long crusaded against corporate America, but increasingly the populist right does too, turned off by toxic business practices like DEI and ESG.
But what happens when the contempt for business goes too far? What happens when it destroys a low-cost airline, hurting American workers and consumers?
This is the situation confronting those who cheered on the Biden administration’s antitrust revolution. Under the oversight of Jonathan Kanter at the Department of Justice’s Antitrust Division and Lina Khan at the Federal Trade Commission, the government largely abandoned the consumer welfare standard, which holds that the feds should interfere with mergers or business contracts only if the consumer stands to be directly harmed.
The companies that the Biden antitrust enforcers targeted span nearly every corner of the American economy — from John Deere and Pepsi to Southern Glazer’s, the nation’s largest liquor distributor, as well as one of the largest Christian universities and four of the five biggest tech companies.
Also included was JetBlue, which at the time was trying to purchase Spirit Airlines. Both JetBlue and Spirit were struggling amid rising inflation, especially Spirit, which had tight profit margins because it offered lower fares. We can never know for sure, but the merger could have not only stabilized both companies but created a globally scaled budget airline that could have competed with the likes of Delta and United. Such competition would have helped arrest rising prices at the airport.
It seemed like a win-win-win, yet the Biden administration’s aversion to “bigness” mattered more. A whole-of-government attack was launched against JetBlue–Spirit. The Department of Justice sued. The Department of Transportation investigated. Elizabeth Warren sounded alarm bells in the Senate.
Ultimately the deal’s opponents got what they wanted. After a year of taxpayer-funded litigation, a federal judge agreed with the DOJ and blocked the JetBlue–Spirit merger. Spirit Airlines now had no lifeline for its low-price, low-frills business model. The company filed for bankruptcy twice before going belly-up this month.
It was a stunning collapse, one driven by ideology.
But the death of Spirit isn’t just an opportunity to dunk on Democrats, as many online are doing. It’s also an indictment of the revival of early-20th-century “anti-big ideology” on the left and elements of the right, too. Unleash the regulators on those deemed a monopoly (or potential monopoly), then competition will flourish, prices will come down, jobs will bloom, and everyone will be better off.
Instead, reality proved more potent than ideological fantasy, and everyone is now worse off. Spirit has gone while JetBlue is facing turbulence. At Spirit, more than 17,000 jobs have been axed, the same workers whom anti-bigs always claim to fight for: pilots and flight attendants and mechanics. Without Spirit applying pressure, airline fares are expected to rise even higher while fliers will have one less option for their travel plans.
The only winners here are the established market players that the populists profess to loathe, the Big Four airlines: Delta, United, Southwest, and American. Without Spirit nipping at their heels, they’re even more entrenched.
The consumer welfare standard is, of course, meant to place the consumer front and center in antitrust policy. But it also functions as a restraint on regulators, creating clear and limited criteria for when government may intervene in markets. It understands that left to their own devices, regulators will act arbitrarily and create unintended consequences they can’t foresee at the outset.
This is exactly what the Biden team wrought with Spirit Airlines. Now, all eyes turn to Donald Trump. Trump has never fully thrown in with the anti-bigs, but some in his administration, including his Antitrust Division interim head Omeed Assefi and FTC Chairman Andrew Ferguson, risk paying an unhealthy amount of homage to Khan and the rest of the Biden antitrust enforcers by keeping alive antitrust suits with little obvious connection to the consumer welfare standard.
Current enforcers should treat Spirit Airlines not as a mere talking point against the Biden administration but also as a cautionary tale. The left claims to fight the bigs, but their meddling too often hurts those they try to help. The right has its own brand of populism, but it must avoid the left’s mistakes if it’s going to be effective.