The Justice Department and officials from six states have filed a lawsuit to block a partnership between American Airlines and JetBlue, saying it would reduce competition and lead to higher fares.
The Justice Department said on Tuesday that the deal would eliminate significant competition in Boston and New York City and reduce JetBlue’s incentive to compete with Americans in other parts of the country.
Attorney General Merrick Garland said the lawsuit was aimed at ensuring fair competition that allows Americans to fly affordably.
âIn an industry where just four airlines control over 80% of domestic air travel, American Airlines’ alliance with JetBlue is, in fact, an unprecedented move to further consolidate the industry,â Garland said in a report. communicated. âIt would mean higher prices, less choice and lower quality service if it were allowed to continue. “
The airlines have promised to fight the lawsuit.
American and JetBlue say they have launched 58 new routes from four airports in the northeast, added flights on other routes and planned new international routes through 2022 due to the partnership.
US CEO Doug Parker said blocking the JetBlue deal “would take away consumer choice and inhibit competition, not encourage it.” This is not a merger: American and JetBlue are – and will remain – independent airlines. “
JetBlue CEO Robin Hayes said his airline has been successful in New York and Boston, but cannot grow any more against Delta and United due to obstacles such as the difficulty of getting more flight time at crowded airports in the area.
“These obstacles to growth have led us to an unlikely alliance with American Airlines which, even as the largest carrier in the world, has also been unable to compete with the dominance of Delta and United in the North. is, âsaid Hayes.
American and JetBlue announced their deal last year and have already started to coordinate their flights in the Northeast. They argue that this is a consumer-friendly deal that has already helped them add several dozen new routes and challenge Delta Air Lines and United Airlines in the region.
The lawsuit comes two months after President Joe Biden issued an executive order calling on government agencies to help consumers by increasing competition in the airline industry and other sectors of the economy.
The deal was approved under certain conditions by the Department of Transportation in the dying days of the Trump administration. However, Justice Department antitrust lawyers began to examine the deal more closely this spring and requested interviews and documents from the airlines, according to a company lawyer involved in the case.
Over the past three weeks, it has become clear that the Justice Department is likely to take legal action, said the lawyer, who requested anonymity because discussions with regulators were private.
Airlines call their partnership Northeast Alliance or NEA. It allows American and JetBlue to sell seats on each other’s flights and offer customers reciprocal benefits under separate loyalty programs.
American and JetBlue argue the deal benefits consumers by making their combination a stronger competitor in the Northeast. Together, the airlines say, they controlled 16% of the region’s air travel market before the partnership, and that figure has risen to 24%.
The airlines argue that the Justice Department has no evidence that their deal results in higher fares. Air travel prices have been hit by the pandemic, which continues to reduce travel demand and lower fares.
American and JetBlue argue that nothing in their agreement controls prices and that each airline will continue to set its own rates.
Southwest Airlines and Spirit Airlines have filed formal complaints against the American-JetBlue alliance, arguing that with a similar West Coast deal between American and Alaska Airlines, it will make American too big.
Spirit said the Department of Transportation did not listen enough to the public before approving the deal, although the agency asked American and JetBlue to make concessions, including handing over some take-off slots and d landing at John F. Kennedy International Airport in New York and Washington. Reagan National Airport outside of Washington. Spirit and Southwest have asked for more concessions.
The Justice Department lawsuit was filed in Massachusetts federal district court. The department was joined by attorneys general from California, Massachusetts, Florida, Pennsylvania, Virginia, Arizona, and the District of Columbia.