Sep 21, 2021 - Economy

DOJ sues American Airlines, JetBlue to block "unprecedented" alliance

Photo of an American Airlines airplane facing a JetBlue airport on the ground

Photo: Andrew Harrer/Bloomberg via Getty Images

The Justice Department on Tuesday sued American Airlines and JetBlue to block an "unprecedented series of agreements" that will consolidate the two airlines' operations in Boston and New York City.

Why it matters: The civil antitrust complaint alleges that the planned Northeast Alliance (NEA) "will cause hundreds of millions of dollars in harm to air passengers across the country through higher fares and reduced choice," the DOJ said in a release.

  • The plan would eliminate competition in the two cities and "significantly" diminish JetBlue's incentive to compete with American elsewhere, the DOJ says.

Details: The alliance is a commitment 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, according to the DOJ.

  • The two airlines will also share revenues earned in Boston and New York City and pool their gates and takeoff and landing authorizations.

What they're saying: "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," Attorney General Merrick Garland said in a statement, noting that American is one of the largest airlines in the world.

  • "The complaint filed today demonstrates the Justice Department’s commitment to ensuring economic opportunity and fairness by protecting consumers and competition."

The other side: "Before the alliance, Delta and United dominated the New York City market," American Airlines chairman and CEO Doug Parker said in a statement. "The NEA has created a third, full-scale competitor in New York and is empowering more growth in Boston."

  • "Ironically, the Department of Justice’s lawsuit seeks to take away consumer choice and inhibit competition, not encourage it," Parker said, arguing that NEA is not a merger.
  • "We look forward to vigorously rebutting the DOJ’s claims and proving the many benefits the Northeast Alliance brings to consumers."

In a message to JetBlue crewmembers on Tuesday, CEO Robin Hayes emphasized the opportunities and growth enabled by the alliance.

  • "While it’s extremely unfortunate DOJ would rather take us to court than help us compete, we’re ready to make a strong case on why more low-fare JetBlue growth is good for Customers," Hayes wrote.
  • "We fully expect the court to find that nothing about the NEA changes our business model or our role as a force for good in the industry."
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