Let the charm offensive begin as Frontier Airlines (ULCC) seeks to seal the deal on its mega-merger with fellow low-cost carrier Spirit Airlines (SAVE).
Part of that charm offensive will include airlines tempering regulators’ worries about potential future prices for travelers if the companies are merged.
“This merger will create a very large low-cost carrier with true national capabilities and deliver lower fares to more people and places. The facts simply confirm that, when left to our own devices, we have in makes very low prices. So the idea that we would raise prices is just nonsense. It would be like Walmart merging with a dollar store to raise prices. It’s just not going to happen,” Barry said. Biffle, CEO of Frontier Airlines, on Yahoo Finance Live.
Frontier Airlines and Spirit Airlines announced their $6.6 billion combination in February.
If the two companies merged, the airline would be the fifth largest in the United States. It would be the biggest deal with a major airline since Alaska Airlines merged with Virgin America in 2016.
The merger has already crossed the radar screen of far-left Democratic senators Bernie Sanders and Elizabeth Warren. Both fear that removing a competitor from the market will drive up airfare prices.
“For decades, the airline industry has been plagued by increasing consolidation, producing massive airline giants while leaving consumers and workers behind. Given that the proposed Spirit-Frontier merger threatens to exacerbate these trends – including potentially raising prices during a time of high inflationary pressure – we urge the Department of Justice (DOJ) and the Department of Transportation (DOT) to closely examine this mega merger for potential violations of the Clayton Act and for concerns under 49 USC § 41105 and to oppose it if you determine that it will threaten competition in the airline industry or ‘public interest’,” Warren, Sanders and several other lawmakers send in a statement.
Frontier’s Biffle said it understands regulators’ concern, but this time it’s different.
“Look, I don’t know if they’re wrong. I think they’re concerned about what happened with past mergers, and we share that concern. That’s why this merger is so important today. because it’s unlike anything we’ve had in the past,” Biffle added.
Brian Sozzi is editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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