Spirit Airlines and the Government’s Antitrust Follies

Ronald Reagan had a saying about how government works: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

His point was that bureaucrats love to “solve” problems, which inevitably creates new problems that they then “solve” again. There are few better examples of this than how Washington treated Spirit Airlines.

The follies began in 2022 when JetBlue announced it would be purchasing Spirit, a budget airline that was experiencing financial difficulties thanks to rising costs and large debt.

The merger made sense all around: it would save Spirit, preserve the carrier’s low fares as an option for consumers, and give JetBlue the market power to compete with the “big four”—Delta, Southwest, American, and United.

Then the Biden administration got involved. The Justice Department sued to stop the merger, claiming it would “limit choices and drive up ticket prices for passengers across the country” as well as “eliminate Spirit’s unique and disruptive role in the industry.”

Got it? The argument was that by saving Spirit Airlines, JetBlue would eliminate it. The Biden administration ultimately convinced a judge to take its side, and the merger was killed. Spirit went on to file for bankruptcy twice, once in 2024 and again in 2025.

This was typical of the Biden team’s approach to antitrust, which departed from the traditional focus on the welfare of the consumer in favor of a “throw everything at the wall and see what sticks” approach.

Let’s look at other examples. Under the command of radical left-wing zealot Lina Khan, Biden’s Federal Trade Commission sued Pepsi for daring to offer discount prices at a time of inflation. It sued John Deere for trying to profit from equipment repairs even though the parties were already in mediation.

The Biden administration also sued Hewlett Packard Enterprise for trying to purchase Juniper Networks, even though the deal promised to create an American tech company that can compete with China’s Huawei, which currently overwhelmingly dominates the global marketplace.

And the Biden administration seems to have killed Spirit Airlines. In order to save it, of course. 

But we may have dodged a different bullet. The federal government reportedly was considering bailing out Spirit to the tune of $500 million in taxpayer money plus a possible massive equity stake in the company.

Remember, this problem could have been solved four years ago by a private-sector deal. JetBlue was ready to save Spirit so it could compete with the big four, a win-win-win for consumers: more competition, more choices, and lower prices.

Instead that same consumer was being threatened, facing the possibility of being asked to pony up half a billion to cover for a previous government mistake which he also helped fund. That sound you hear is Ronald Reagan laughing from beyond the grave.

As the Wall Street Journal points out, there are several other reasons for Spirit Airlines’ woes. Artificially depressed interest rates by the Federal Reserve allowed Spirit to load up on debt, and when those rates along with labor costs inevitably rose after the pandemic, companies like Spirit experienced serious losses.

But the biggest flub here was the Biden administration’s topsy-turvy approach to antitrust. And that philosophy lives on even after Biden shuffled out of the White House. Incredibly, the American Economic Liberties Project, an outfit closely associated with Khan’s staff, blamed Spirit Airlines’ woes on … deregulation!

Thankfully, the Trump administration has taken a more sensible approach on competition issues, ending many of the Biden antitrust suits (though some remain) while restoring the consumer welfare standard (somewhat).

The current administration doesn’t now need to perpetuate another Biden-era blunder by bailing out Spirit. Markets will be fine if Spirit goes under, and the last thing taxpayers need is their own airline.

President Donald Trump didn’t cause this problem, but he should repudiate his predecessor one more time and let it go.

We publish a variety of perspectives. Nothing written here is to be construed as representing the views of The Daily Signal.