“They’re desperate to get this approved and they figure if the state of Florida comes on board it gives a leg up,” he said.įrom a practical business perspective, Henry Harteveldt, co-founder of Atmosphere Research, a San Francisco-based industry consultancy, questioned how JetBlue could sustain such a commitment. “State regulation of the airlines is clearly prohibited by the Airline Deregulation Act,” Miller said, adding that JetBlue is “trying to score political points.” Jeff Miller, a lawyer who recently retired as a business school professor at Florida Atlantic University, and who worked for the old CAB in the 1970s, asserted the state agreement can’t be enforced. Pay up to $80 million in penalties “and other relief available under the laws of the State of Florida” if it fails to comply with the agreement.”Maintain all Florida facilities currently in use by either JetBlue or Spirit, including Spirit’s planned future headquarters in Dania Beach, at their current or planned employment levels or greater for at least five years following the merger.”. Extend JetBlue’s “no furlough” policy for Florida employees by five years and boost the compensation of former Spirit workers.”Bring at least 1,000 new jobs to South Florida, at least 500 new jobs to the Orlando region, and at least 500 new jobs to support JetBlue’s expanded operations at airports throughout Florida.”.Increase its “aggregate seat capacity at all other Florida airports in which JetBlue or Spirit currently operate by at least 50%.”.Increase its seat capacity by at least 50% in both Fort Lauderdale and Orlando.Most of the economic and operational rules melted away as the board closed its doors.īut now Florida has stepped onto the airline merger stage, and according to the state Attorney General’s Office, JetBlue would be obliged to do the following if it ends up acquiring Spirit: Before passage of the Airline Deregulation Act, a now-defunct federal agency known as the Civil Aeronautics Board dictated when and where airlines could fly, and how much they could charge. JetBlue’s settlement with Florida, however, raises the question of how a state can dictate service terms in an industry that was largely deregulated by Congress in 1978, more than four decades ago. market, industry officials and analysts say. Combined, those four constitute 80% of the U.S. The proposed acquisition would see South Florida-based Spirit disappear and become a part of JetBlue, which argues the takeover is necessary for it to compete with the “Big Four” carriers of American Airlines, Delta Air Lines, Southwest Airlines and United Airlines. The Florida attorney general’s office did not respond to questions about what concerns it harbored about the merger after JetBlue and Spirit announced their $3.8 billion deal last year. It also did not respond to questions as to whether it contemplated joining the federal lawsuit or considered undertaking its own action in state court. The airline went on to say that it is “confident that a combined JetBlue and Spirit, with a significant number of aircraft on order, will be well positioned to reach the growth metrics outlined and successfully operate a larger schedule in Florida, which is experiencing incredible economic growth.” “We can’t speak for the state, but we can say that we are appreciative of Florida State Attorney General Moody’s willingness to recognize the opportunity for the state of Florida and negotiate a fair settlement.” “We believe the settlement agreement is a model for how states can ensure the merger delivers on promised benefits,” JetBlue said in a statement to the South Florida Sun Sentinel. The suit, which was joined by New York, Massachusetts and the District of Columbia, alleges the merger would narrow competition and raise fares for consumers. Justice Department sued in federal court to block the takeover. The agreement, which calls for an expanded JetBlue to meet flight service and employment goals in Florida over a five- to seven-year period, was announced by the office of Attorney General Ashley Moody, one day before the U.S. If any observers doubt JetBlue Airways’ determination to take over Spirit Airlines, they need only to look toward the extraordinary settlement agreement the New York-based carrier cut last week with the state of Florida to gain its support for the proposed merger.
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