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Sun Country, Allegiant Merger Collapses

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  Published in Business and Finance on Tuesday, January 13th 2026 at 14:16 GMT by CBS News

Minneapolis, MN - January 13, 2026 - A highly anticipated merger between Sun Country Airlines and Allegiant Air has officially fallen apart, ending a deal that promised to reshape the American airline landscape. Both companies confirmed the termination of the $1.9 billion agreement on Tuesday, citing an inability to secure the necessary regulatory approvals.

The announcement marks the end of a journey that began in 2023, when the two budget-focused carriers first unveiled plans to combine forces. Had the merger succeeded, the newly formed entity would have become the fifth-largest airline in the United States, boasting a significant presence in the leisure travel market.

Regulatory Roadblocks Prove Insurmountable

The primary obstacle to the merger wasn't internal disagreements or financial concerns, but rather intense scrutiny from regulatory bodies. The U.S. Department of Transportation (DOT) and potentially other agencies raised serious questions about the potential impact on competition. Regulators expressed fears that the consolidation of two major low-cost carriers could lead to higher fares and reduced service options for consumers.

"While we understood the potential benefits of combining our operations, we respect the regulatory process and ultimately realized that gaining approval was unlikely given the concerns raised," stated a joint statement released by Allegiant's leadership. Sun Country echoed this sentiment, expressing disappointment but acknowledging the realities of the situation.

Analysts had predicted the regulatory challenges, noting that the current administration has taken a stricter stance on airline mergers, emphasizing a commitment to protecting consumer interests and maintaining a competitive aviation market. The proposed merger was viewed by some as creating an overly concentrated market in several key regions where both airlines operate.

What This Means for Sun Country

With the merger off the table, Sun Country Airlines is shifting its focus back to its independent growth strategy. The airline plans to continue its expansion across the United States, Mexico, and Central America, leveraging its unique operational model and established routes. Sun Country has been steadily expanding its network, particularly focusing on underserved markets and building strong relationships with vacation destinations. Their recent investments in fuel-efficient aircraft are expected to enhance their competitive position.

"We remain committed to our vision of providing affordable and convenient air travel to destinations across the Americas," said Sun Country CEO Jude Gerry in a prepared statement. "Our focus now is on executing our existing growth plan and delivering value to our customers and shareholders."

Allegiant's Continued Ultra-Low-Cost Approach

Allegiant Air, known for its ultra-low-cost carrier (ULCC) model, will also proceed with its existing strategy. The airline's focus remains firmly on providing deeply discounted fares to leisure travelers seeking vacation destinations. This involves operating point-to-point routes, often connecting smaller cities to popular tourist hubs.

The collapse of the merger may actually solidify Allegiant's position. Without the distraction and expense of integration, the company can focus entirely on optimizing its ULCC operations and continuing to capture market share from larger, legacy carriers. However, Allegiant will face continued pressure to manage rising fuel costs and maintain its fare structure.

Ripple Effects and Future Mergers

The failure of the Sun Country-Allegiant merger could have broader implications for the airline industry. It suggests that significant consolidation in the sector will face increasing resistance from regulators, potentially making future merger attempts more difficult. Other airlines seeking to expand through acquisition may need to reassess their strategies and demonstrate a clear benefit to consumers.

While the skies remain separate for now, the airline industry continues to evolve. Sun Country and Allegiant will both navigate this changing environment, charting their own courses to serve the ever-growing demand for affordable air travel.