EDITORIAL: That’s the Spirit! The folly of central planning

The Spirit Airlines saga highlights the folly of government industrial policy — whether promoted by Democrats or the current president.

Last week, President Donald Trump floated a $500 million bailout for the low-cost carrier, which has twice filed for bankruptcy and is now struggling because of soaring fuel costs triggered by the Iran war. The Hill reported that the deal “could eventually give the U.S. government the option of up to a 90 percent ownership stake in the airline.”

Flash back to July 2022 when Spirit and JetBlue announced a plan to combine operations. “We are thrilled to unite with JetBlue,” Spirit CEO Ted Christie said in a news release, “through our improved agreement to create the most compelling national low-fare challenger to the dominant U.S. carriers.” He called the move a “game-changer” that would benefit consumers and bolster the fortunes of the carrier.

The new airline would have accounted for just 8 percent of domestic air travel. But the Biden administration, in the thrall of progressive economic policy that views productive business endeavors with the utmost suspicion, soon stepped in. Within months, the Justice Department sued to stop the merger on the shaky theory that it would drive up airfares for consumers. A federal judge weighed in on the side of the government, and the airlines gave up rather than fight back.

The Heritage Foundation noted that the move obstructed a “path to future prosperity” for the airlines and predicted that “Spirit is all but condemned to death, and investors know it.” That prognostication proved prescient. Democrats unwisely preferred one or two defunct airlines over one stronger and more viable combination of the two. How that was supposed to lead to a more competitive environment for airline passengers was never explained.

Spirit has since barely survived. The Iran war has only increased pressure on the carrier. This led Mr. Trump to float the prospect of large infusion of government cash for Spirit. But the president didn’t make clear why a federal takeover of a small airline that has foundered for years would be an efficient use of capital or benefit American taxpayers. It’s a question that even Transportation Secretary Sean Duffy found relevant.

“What we don’t want to do is put good money after bad,” Mr. Duffy told Reuters, “and there’s been a lot of money thrown at Spirit, and they haven’t found their way into profitability. And so would we just ​forestall the inevitable and then own that?”

A government handout for Spirit is an awful idea. But the current debate would be unnecessary had the central planners in the Biden administration suppressed the urge to intervene in the first place.