Spirit Airlines ceased operations on May 2, 2026. Two years earlier the Justice Department blocked its merger with Frontier on the theory that the combination would reduce competition. In RealClearMarkets I argue that the regulators got the market exactly wrong, and that nobody who made the call will answer for it.
The government assumed that blocking the deal would preserve the competitive conditions of the day. Markets do not hold still during litigation. Spirit, which represented 46 percent of ultra-low-cost airline capacity, kept deteriorating, a $500 million federal rescue package failed, and the airline exited entirely. Its capacity and its employees are gone, some of the latter turning to GoFundMe. Delta, American, and United gained the pricing power the merger challenge was supposed to prevent.
Antitrust law has a doctrine for this scenario, the failing-firm defense, but courts and agencies have read it so narrowly that a company must be at the edge of liquidation before it applies. The static market fallacy did the rest: regulators modeled a world where Spirit survives without the merger, and that world never existed.
The fix is procedural. The administration should rewrite the merger guidelines to require regulators to model realistic counterfactuals, including firm exit, and to hold agencies accountable when the market proves their predictions wrong.
Read the full piece: Spirit Airlines Is Gone. The Bureaucrats Who Killed It Aren’t (RealClearMarkets, June 1, 2026)