Spirit Airlines (SAVE  ) has turned down JetBlue's (JBLUE  ) for Frontier Airlines (ULCC  ) less lucrative offer. According to Spirit's Monday response, the airline made the decision out of concern over the potential regulatory disapproval of the merger.

"We believe a combination of JetBlue and Spirit has a low probability of receiving antitrust clearance so long as JetBlue's Northeast Alliance (NEA) with American Airlines (AAL  ) remains in existence," Spirit said in its response, citing the pending lawsuit by the Department of Justice (DOJ) and several state attorneys general to block said alliance. "We struggle to understand how JetBlue can believe DOJ, or a court will be persuaded that JetBlue should be allowed to form an anticompetitive alliance that aligns its interests with a legacy carrier and then undertake an acquisition that will eliminate the largest ULCC carrier."

JetBlue's offer came to the surprise of many, with the airline seeming to hedge on a bet that acquiring Spirit would help it increase its presence at major airports, where gate assignments are highly competitive. The failure to woo Spirit comes after JetBlue previously lost its bid to attract Virgin America, which was subsequently acquired by Alaska Airlines (ALK  ). JetBlue doesn't seem to be accepting the second rejection, however, with the airline doubling down on its offer.

JetBlue dangled a second "enhanced" deal on Monday in an apparent last-ditch move to woo Spirit after the initial rejection. While the price per share offered by JetBlue went unchanged, the airline provided a "break-up fee" to address regulatory concerns and other measures such as "limited carve-out actions" by JetBlue's alliance with American Airlines. It has been reported, but not widely confirmed, that JetBlue has hinted at the potential of a hostile takeover.

Spirit shares are trading 8.4% lower after markets closed on Tuesday after investors took in the news of the decision. On Monday, Frontier shares saw a momentary spike before slipping slightly, ending Tuesday 0.75% lower. JetBlue shares meanwhile climbed 3.2% during the same two-day period.