JetBlue-Spirit Public Interest Review at DOT Muddies Deal Outlook

JetBlue Airways Corp.‘s $3.8 billion acquisition of Spirit Airlines Inc. is facing a regulatory crossfire after the Department of Transportation invoked its seldom-used authority to investigate airline mergers.

The agency announced Tuesday it would probe whether the combination is in the public interest before issuing approval, rather than leaving the matter up to the Justice Department. That power, combined with the DOT’s ability to police unfair competition methods in the transportation business, is a significant hurdle that may be tougher for the companies to clear than the DOJ’s antitrust lawsuit against the deal.

“The combination of DOJ and DOT ...