Justice Department Sues to Stop American Airlines and JetBlue Partnership
The recently announced American Airlines and JetBlue partnership is facing uncertainty. The Justice Department and officials in six states have filed a lawsuit, claiming that it will reduce competition and lead to higher fares.
“Millions of consumers across America rely on air travel every day for work, to visit family, or to take vacations. Fair competition is essential to ensuring they can fly affordably and safely,” said Attorney General Merrick B. Garland said in a statement. “In an industry where just four airlines control more than 80% of domestic air travel, American Airlines’ ‘alliance’ with JetBlue is, in fact, an unprecedented maneuver to further consolidate the industry. It would result in higher fares, fewer choices, and lower quality service if allowed to continue. The complaint filed today demonstrates the Justice Department’s commitment to ensuring economic opportunity and fairness by protecting consumers and competition.”
The Northeast Alliance combines operations of both airlines at four major airports: Boston Logan, John F. Kennedy, LaGuardia and Newark Liberty. The airlines have committed to coordinate “on all aspects” of network planning, including which routes to fly, when to fly them, who will fly them and what size planes to use for each flight.
The two airlines will also share revenues earned at these airports, eliminating their incentives to compete with one another. The Northeast Alliance will also allow the parties to pool their slots. According to the complaint, this unprecedented combination would raise prices and reduce choices for air passengers traveling to and from Boston and New York City.
The Transportation Department approved the agreement, with certain conditions, in January. The airlines gave up some takeoff and landing slots at John F. Kennedy International Airport in New York and Washington Reagan National Airport outside Washington, and they agreed not to cooperate on setting prices.
American and JetBlue argue that the deal is pro-consumer and that the Justice Department has no evidence that their agreement is leading to higher fares.