The Justice Departments Fight With American Airlines and JetBlue Heads to Court
American Airlines,In the US, four airlines control nearly 80% of the domestic air travel market, and the Justice Department is suing them to protect competition. The complaint filed against American Airlines and JetBlue is aligned with a 9 July order signed by President Joe Biden aimed at increasing competition and protecting consumers. The US attorney general says the complaint demonstrates a commitment to protecting competition and consumers. Acting assistant attorney general Richard Powers has criticized the alliance as a de facto merger in New York and a threat to competition.
JetBlue CEO Robin Hayes expected to be first witness in antitrust case
JetBlue CEO Robin Hayes is expected to be the first witness in the antitrust case that is aimed at preventing the merger of two US airlines. The merger was previously planned between Spirit Airlines and JetBlue, and it is currently pending before US antitrust regulators. The Justice Department lawyers say that the merger would further hurt the Northeast Alliance, which consists of JetBlue and Spirit Airlines.
The airline industry is undergoing a tumultuous time. Many major airlines have filed for bankruptcy, and the resulting uncertainty has caused thousands of job losses. In the past, federal regulators have routinely approved airline consolidation. In fact, in the past five years, five of the top 10 largest airlines filed for bankruptcy, and several more have been liquidated. Concerns about too much control of the market have usually been settled by establishing agreements over flight slots and gates at overcrowded airports.
Agreement doesn’t control pricing
The Justice Departments fight with American Airlines and JetBlue is a major test of consumer protection laws. The airlines are under fire for a proposed merger that will eliminate competition in New York and Boston. The two airlines are merging operations at Logan International Airport in Boston and John F. Kennedy Airport in New York. While the merger could lead to lower fares, the DOJ claims it will hurt consumers and the economy.
The Justice Departments lawsuit is part of the Biden administration’s effort to enforce antitrust rules and encourage competition. It also targets the Northeast Alliance partnership between American Airlines and JetBlue Airways, which was announced in September 2018. The alliance allows the two airlines to pool airport slots and share revenue from flights. It also allows them to link frequent flyer programs.
Southwest Airlines, Spirit Airlines file formal complaints against alliance
Spirit Airlines and Southwest Airlines have filed formal complaints against the JetBlue Airways-American Airlines alliance, which they say could impede competition. The complaint asks the DOT to review the alliance. JetBlue and American Airlines deny any coordination outside of the NEA. However, Spirit notes that American made public statements citing JetBlue routes in the Northeast when it expanded its network out of Austin.
Both airlines say the alliance will hurt competition and will result in higher prices for travelers. They say the alliance will make American and JetBlue too big and will reduce competition among airlines. They argue that the two carriers have not listened to the public and will monopolize slots at key East Coast airports. Currently, they each hold 32% of the slots at New York’s LaGuardia and Reagan National airports. In addition, they claim that the alliance will eliminate competition by pooling slot allocation, raising prices and reducing choice for air passengers.
The U.S. Department of Justice, together with Attorneys General in six states and the District of Columbia, sued today in the District of Massachusetts to block an unprecedented series of agreements between American Airlines and JetBlue through which the two airlines will consolidate their operations in Boston and New York City. The civil antitrust complaint alleges that this extensive combination, which they call the “Northeast Alliance,” will not only eliminate important competition in these cities, but will also harm air travelers across the country by significantly diminishing JetBlue’s incentive to compete with American elsewhere, further consolidating an already highly concentrated industry.
