National

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."

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

It will cause "hundreds of millions of dollars in harm to air passengers across the country," the antitrust complaint alleges.

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

Photo: Andrew Harrer/Bloomberg via Getty Images

Department of Justice (DOJ)

Transportation

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

Axios Closer

Continued worries about the Delta variant are derailing fall travel plans.

Driving the news: Thanksgiving domestic flight bookings in August were 18% lower this year compared with 2019, according to a new Adobe Digital Economy Index report out Monday morning. 

Why it matters: Spring hopes that air travel would pick up later in the year, providing much-needed relief to a battered industry, have been dashed.

The big picture: Domestic flight demand is still far off pre-pandemic levels.

Online bookings last month reached $4 billion, a decline of 35% from pre-pandemic levels in August 2019 and 24% from this July.

Year-to-date through August, total domestic bookings represent $38 billion, down 30% from the same time period in 2019.

What they’re saying: When flight bookings for November and December were up 9% and 17% in March versus March 2019, it was a promising signal, says Vivek Pandya, lead analyst at Adobe Digital Insights.

But consumers became more cautious as the Delta variant spread. The bulk of bookings happens three to four months before peak periods, so August is beginning to show a better picture of what the rest of the year might look like, Pandya adds. 

The bottom line: The economy’s recovery has been uneven and is still dependent on solving the health crisis. 

Delta variant fears curb fall flying

Hopes that air travel would pick up later in the year, providing much-needed relief to a battered industry, have been dashed.

Travelers in the Miami International Airport. (Photo by Joe Raedle/Getty Images)

Travelers in the Miami International Airport. Photo: by Joe Raedle/Getty Images

Air travel

Axios AM

TSA checkpoint travel numbers 

Airbnb CEO Brian Chesky will argue this week that the world is undergoing a "travel revolution," in which some parts of the industry stay shrunk but the sector ultimately comes back "bigger than ever."

Why it matters: Chesky, who faced the abyss when the world shut down last year, foresees a significant shift in how people move around, with more intentional gatherings of family, friends and colleagues — even if routine business travel is never what it once was.

Driving the news: Chesky will unveil his "revolution" this week at the Skift Global Forum, a gathering of travel-industry leaders (in-person, of course — vaccinated-only, near JFK airport). Among Chesky's top points:

Travel will be back bigger than ever — just not like it was in 2019. People have been isolated on a scale and for a duration never seen before, and want to come together. 

The flexibility created by remote work is driving this shift. Zoom is the latest to disrupt travel, following revolutions by steam engines, mass-produced cars and commercial air travel. 

A factor helping the travel business, Chesky will argue:

Extended weekends are on the rise. Airbnb says bookings for three- and four- day weekends with families are up 70% from Q2 2019 to Q2 2021.

Long-term stays (28+ nights) were Airbnb's fastest-growing trip-length category in Q2 data. Airbnb says its surveys show people plan to continue extended getaways. 

The big picture: Domestic flight demand remains far off pre-pandemic levels.

Online bookings last month reached $4 billion, a decline of 35% from August 2019 and 24% from this July. 

Year-to-date through August, total domestic bookings represent $38 billion, down 30% from the same period in 2019.

Airbnb CEO Brian Chesky to herald "travel revolution"

Chesky foresees a significant shift in how people move around the world.

Airbnb

Axios What's Next

The Nissan Pathfinder has received a welcome makeover for 2022, going from run-of-the-mill crossover to stylish and rugged contender among family-friendly SUVs.

The big picture: It's the latest in a string of attractive models from Nissan, which has been mounting a turnaround effort after abandoning a profit-sapping discount strategy to fuel growth.

What's new: The 2022 Pathfinder was redesigned from the ground up, except for the carry-over V6 engine, which is now paired with a new 9-speed transmission.

I drove the $41,490 Pathfinder SL version with standard front-wheel-drive. (All-wheel drive is optional.)

It came with a $2,900 premium package that added features like a panoramic roof, heated second-row captain chairs and a 13-speaker Bose audio system. 

The interior was spacious and comfortable, with one-touch access to third-row seating and desirable tech features like a 9-inch infotainment screen, Apple CarPlay, a wireless charging pad and a WiFi hotspot.

One cool feature: The hands-on, assisted-driving system (Nissan ProPILOT Assist) is linked to the car's navigation system, which means the Pathfinder knows when a curve or exit is coming up and will automatically slow down.

One annoying feature: The Pathfinder honked six times every time I exited the vehicle. It's Nissan's way of reminding drivers to check the back seat for kids or pets. 

Hot-car deaths are avoidable tragedies, and a proposed law would require all cars to have a rear-seat-check reminder.

But safety advocates say technology that actually detects movement inside the vehicle is preferable.

It would also save my neighbors — and me — some annoyance.

What we're driving: The 2022 Nissan Pathfinder

It's more rugged-looking, with lots of tech and family-friendly features

Image of red 2022 Nissan Pathfinder SUV on a country road

Nissan

The electric Ford F-150 Lightning pickup hasn't even gone on sale yet, but demand is so hot that the company is already expanding production. 

Driving the news: The first Lightning prototypes are leaving Ford's Dearborn, Mich., factory for real-world testing, with the truck available to customers next spring. 

But with 150,000 "pre-orders" in hand, Ford said today it will invest an additional $250 million and add 450 more jobs to boost production at the EV assembly plant and two nearby component factories.

The moves will help increase production capacity to 80,000 trucks a year.

Why it matters: Many have questioned whether truck buyers would trade their gas-powered workhorse for an electric pickup that needs to be plugged in every day. Ford's decision to expand production capacity shows that the company is increasingly confident the answer is yes. 

What they're saying: “We knew the F-150 Lightning was special, but the interest from the public has surpassed our highest expectations and changed the conversation around electric vehicles. So we are doubling down, adding jobs and investment to increase production,” said executive chairman Bill Ford.

Details: The new $250 million investment follows $700 million invested last year to prepare Ford's historic Rouge manufacturing plant for electric vehicle production.

What to watch: The F-150 Lightning, which starts at $40,000 and aims to provide up to 300 miles of driving range, goes on sale next spring. 

Ford adds jobs to meet soaring demand for electric F-150 Lightning

Ford's battery-powered truck isn't even on sale yet, but it's already expanding production capacity.

Image of a factory worker assembling the Ford F-150 Lightning electric pickup truck

Ford's first F-150 Lightning pickup truck prototypes are rolling out of the factory in Dearborn, Michigan, for real-world testing. Photo: Ford Motor

Ford Motor Company

Electric vehicles

Ominous forecasts about the impact of climate change serve as the backdrop for the world — led by U.S. lawmakers and companies — to debate big action on the problem, which could upend energy systems and our way of life.

Energy & Environment

Electric vehicles might be good for the environment, but they're terrible for state budgets, which depend on fuel taxes to pay for road maintenance. So states like Oregon and Utah are experimenting with new road user fees — known as "vehicle mileage taxes" or VMTs — that reflect changing mobility trends.

Why it matters: By charging drivers for the miles they drive — instead of taxing the gas they use — states can ensure that everyone pays their fair share for public roads. But some drivers might wind up paying more than they do now, and the preliminary technology involved is raising privacy concerns.

How it works: In Utah and Oregon — where EVs and increased fuel efficiency are blowing a hole in road repair budgets — drivers are being asked to enroll in voluntary experiments in pay-as-you-go tolling. 

Under a VMT system, drivers report their mileage electronically, using a plug-in device in their cars or a smartphone app.

Per the Deseret (Utah) News: "Users are given the option to pay 1.5 cents per mile traveled or an annual flat fee of $120 for electric vehicles or $20 for gas hybrids."

Oregon is testing several potential funding models based on the time of day and other factors.

Under one potential scenario, a driver could pay a statewide 1.8-cents-per-mile fee, plus a 20-cent metropolitan Portland surcharge, plus a virtual toll on Interstate 5 and another fee for entering downtown Portland. 

Pros and cons: On the plus side, user fees can help manage traffic congestion and address climate issues by charging different amounts for certain regions, roads and times of day.

However, requiring drivers to insert a transponder in their car is a red flag to some.

And rural drivers, who tend to drive more, could find themselves paying more than urban and suburban residents.

The big picture: The federal Highway Trust Fund, which pays for roads and transit systems through the existing 18.4-cent per gallon fuel tax, is running out of money. 

The budget gap will inevitably grow wider as cleaner cars burn less fuel and EVs become more popular.

States are feeling a similar pinch from their shrinking gas tax collections. 

"Oregon is at the cutting edge of a problem everyone will face," says Michelle D. Godfrey, a spokesperson for OreGO, the state's road usage pilot program. "We have to get real about funding, because it affects everybody." 

Driving the news: The $1.2 billion infrastructure bill working its way through Congress includes $125 million to fund several pilot programs to test the feasibility of VMTs.

This includes $50 million for a five-year national pilot and $75 million to regional, state and local transportation agencies to run their own pilots. 

The intrigue: One way to implement more sophisticated fee policies is through a layered pricing scheme that uses dynamic road pricing and advanced tolling.

ClearRoad, a New York-based startup, is helping several states test automated digital pricing systems without installing roadside cameras, sensors and toll gates.

Such fixed architecture can be expensive: New York's MTA awarded a $507 million contract to a Nashville company to design, build and operate the toll system equipment and infrastructure needed to begin congestion pricing in Manhattan.

During the pandemic, officials in London didn't want to burden essential workers with congestion pricing premiums, but there was no way to distinguish among vehicles, so they had to turn off the entire system. 

"When traffic patterns move, you can’t move the cameras," said ClearRoad cofounder Paul Salama. 

If it sounds like getting nickled and dimed to death, Salama points out it's no different from what Uber and Lyft do every day. 

Their fares often includes extra fees for wait times, surge pricing, highway tolls and airport access.

"It's all digital, so you can change the policies on the fly," said Salama.  

The bottom line: Roads have to be funded, even if gas taxes disappear. Figuring out an equitable fee system is going to be a big challenge. 

New tolling systems are poised to hit highways

Governments could layer surcharges to manage congestion, climate

Illustration of a highway road sign made out of a giant hundred dollar bill.  

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

All vehicles could soon be equipped with warning systems aimed at preventing children from dying in hot cars, but safety advocates say a law working its way through Congress won't do enough to save lives.  

Why it matters: Nearly 40 children die every year of heatstroke because they were left in the back seat by a parent or caregiver — or climbed inside a car on their own. Since 1990, approximately 1,000 kids have died nationwide, according to KidsAndCars.org.

Four have died this month to date, including a baby who suffocated in a car after her mother was shot and killed in Orlando, Florida, and twin toddlers who died in a hot car in South Carolina. 

Driving the news:  The bipartisan infrastructure bill that passed the Senate last month would require new motor vehicles to have an alert system that would remind people to check the back seat upon exiting the car.

The House expects to take up the bill this month.

The law would replace a voluntary commitment by automakers to equip virtually every new car with a rear-seat reminder system by the 2025 model year.

Where it stands: Many new models now come with such reminders via a text message in the instrument cluster, typically accompanied by a chime, when the engine is turned off.

I drove a 2022 Nissan Pathfinder recently that annoyingly honked six times at me whenever I walked away from the vehicle; I finally realized it was the rear-seat reminder.

I repeatedly dismissed the warning on the steering wheel, but to permanently shut it off, I would have had to tinker with the car's settings.

How it works: Most rear-seat reminders are triggered by "door logic" — that is, the system recognizes that the driver opened a rear door at the beginning of the trip.

Yes, but: that technology doesn't know whether the driver opened the door to put groceries or a purse in the back seat — or to buckle in a child.

And it doesn't address the issue of unattended children climbing into a car by themselves — about 25% of all hot car deaths.

What's needed: Cars need more than just a dashboard reminder that can be easily ignored or dismissed by the driver, says Emily A. Thomas, automotive safety engineer at Consumer Reports. 

They need technology that can actually detect the presence of a car occupant. 

So far, only Korean models sold under the Hyundai, Kia and Genesis brands have ultrasonic sensors that can detect movement inside the vehicle — but they are not standard on all models.

The new Genesis GV70 SUV goes a step further with a more sensitive radar sensor that is able to detect a baby's breath. 

What they're saying: Carmakers can — and should — do more, said Janette E. Fennell, president of KidsAndCars.org.

"You can't purchase a vehicle today that doesn't automatically turn off your headlights when you get out of the car. Who decided it's more important not to have a dead car battery than a dead baby?"

What to watch: The occupant detection systems that could prevent children from dying in hot cars operate on the same technology that autonomous vehicles will need in the future to detect and monitor passengers, she noted.

Safety advocates push tech to save kids trapped in hot cars

Rear-seat reminders aren't enough to prevent tragedy, they say

Image of a baby in a car seat in a vehicle. 

Automobiles

Automation and AI

Massachusetts Gov. Charlie Baker (R) on Monday activated the state's National Guard to assist with school transportation.

Driving the news: Schools across the country are experiencing a shortage of bus drivers, which has worsened during the coronavirus pandemic. More than 80% of school districts reported having issued finding an adequate number of drivers.

State of play: Baker said in a press release that 250 guard personnel will become available for the task. 

They will need to complete vehicle training "to ensure the safety of children and families." 

Training is scheduled to start Tuesday, with 90 guard members being sent to help in the cities of Chelsea, Lawrence, Lowell and Lynn.

The guard members will operate vans known as "7D vehicles," which are smaller than regular school buses.

What they're saying: "The Guard has a proven track record of success supporting civilian authorities. Their frequent side-by-side training with state and local first responders makes them well-suited for a variety of missions," Baker said.

Of note: The governor said that the mission will not interfere with the National Guard's ability to respond to emergencies within the state. 

Massachusetts activates National Guard to help with school transportation

The nationwide bus driver shortage has worsened during to the coronavirus pandemic.

 School buses on a lot at Washington St. and Melnea Cass Blvd. August 29, 2019 in BOSTON, Massachusetts. 

 School buses on a lot at Washington St. and Melnea Cass Blvd. on Aug. 29, 2019 in Boston. Photo: Chris Christo/MediaNews Group/Boston Herald via Getty Images

Massachusetts

Coronavirus

The U.S. faces a range of health care flashpoints — unaffordable drugs, opioids, vaping — as we debate whether to adopt universal care. For now, the Affordable Care Act is the law of the land, but Republicans want to issue it a final death blow.

Health

Several major U.S. airlines indicated Thursday that their businesses have taken a hit from a surge in COVID-19 cases driven by the Delta variant.

Why it matters: A recent decline in bookings and an increase in cancellations have triggered a much lower revenue forecast for airlines than previously anticipated. The trend, which was earlier reported by AP, threatens to stifle the industry's rapid recovery from the coronavirus pandemic, which halted air travel in its early days.

American Airlines, Delta Airlines, United Airlines, Southwest Airlines and JetBlue all said in filings that their businesses were hurt by the Delta variant.

The companies have indicated that the decline is more pronounced in business and international travel, both of which are critical to airline revenue.

The big picture: American indicated in a filing Thursday that it had experienced a slow-down in ticket sales in August that has continued into September.

The airline also said it expects third-quarter revenue in 2021 to be down approximately 24% to 28% compared to the third quarter in 2019.

In another filing, Delta noted that total revenue is expected to be at "the lower end of the prior guidance," blaming the virus with lowering demand.

What they're saying: "The variant is forcing us all to realize this is a serious disease ... that we have to deal with," Delta CEO Ed Bastian said Thursday at a conference hosted by investment bank Cowen.

"[Companies are] just not traveling in the volumes necessary yet to get our business back to where we need it to be as they're waiting for the variant to subside," he added.

What's next: The airlines, however, indicated they were optimistic that the downturn wouldn't last long.

Bastian said he expects the Delta variant to delay the recovery by about 90 days.

JetBlue noted that it believes demand for holiday travel will "hold up relatively well."

Airlines warn of ticket slump as Delta variant hits their recovery

The trend threatens to stifle the industry's rapid recovery from the coronavirus pandemic.

Photo: Nicolas Economou/NurPhoto via Getty Images

COVID-19

Axios Pro Rata

We've written before that much of U.S. antitrust law is antiquated, having been written over a century ago to regulate railroads. 

Yes, but: What we've not really mentioned is that railroad-specific rules were updated much more recently, and are complicating one of the largest announced mergers of 2021.

Background: Kansas City Southern in March agreed to be bought for US$25 billion by Canadian Pacific, in order to create the first freight railroad network to connect the U.S., Canada, and Mexico.

Two months later, KCS walked away in favor of a $33.6 billion offer from Canadian National Railway, and paid a $700 million termination fee.

The larger deal included plans to use a voting trust, which would buy and operate Kansas City Southern while the deal is under regulatory review. 

But the voting trust was subject to approval by the Surface Transportation Board, which in 2001 established new rules that would make it tougher for railroads to combine — requiring them to prove such mergers would enhance competition.

STB initially denied Canadian National's voting trust request, but said it would reconsider after KCS accepted the offer. 

Fast forward to last week and STB held firm, unanimously rejecting the voting trust request.

Canadian National also is taking fire from inside the locomotive, as 5% stakeholder TCI Fund Management is agitating for board control and the removal of Canadian National's CEO and chairman for "incompetent" and "weak" management. 

Were it to succeed in its proxy fight, indirectly aided by U.S. regulators, TCI has pledged to stop pursuing the Kansas City Southern deal. 

What now: Canadian Pacific, which was given a waiver to the 2001 rules, lay in wait for most of the time Canadian National was sweating out the STB decision. But last month it upped its bid to $31 billion, and KCS on Saturday said the two sides have restarted talks, acknowledging that the lower-priced deal might be the better deal.

Not so fast: It might not be quite as simple as KCS picking Canadian Pacific. That's because TCI, the activist hedge fund pressuring Canadian National, happens to be the largest outside shareholder in Canadian Pacific — with more than a 8% stake — which could create a different set of legal challenges, given the arguable conflicts of interest.

The bottom line: The route from Canada to Mexico still runs through Kansas City, but there is no longer an estimated time of arrival.

Railroad mega-merger keeps getting sidetracked

Kansas City Southern is in talks with Canadian Pacific after regulators rejected part of Canadian National’s $33.6 billion bid.

Antitrust law

Axios Generate

Beta Technologies, a Burlington, Vermont-based electric aviation company, announced the close of a $375 million Series B funding round on Wednesday, bringing total venture funding for the maker of electric vertical takeoff and landing aircraft (eVTOL) to nearly $800 million.

Why it matters: Beta aims to achieve FAA certification by 2024 and transform the short-range cargo delivery market, from transporting organs to patients to making last-mile and regional cargo deliveries.

The big picture: The funding, led by TPG Rise Climate and Fidelity Management & Research Company, will allow Beta to continue to hone its technology.

The company's aircraft prototype, currently in flight testing, is the dragonfly-like ALIA-250. It can carry up to 1,400 pounds of cargo, or five people plus a pilot.

The plane needs less than an hour to charge after a full mission, the company said in a statement, and on three battery packs (it can hold up to five), the max flight duration is about two hours.

The company is also making a charging network that works for its planes and for electric vehicles.

United Therapeutics, a biotech company founded by Beta director Martine Rothblatt, plans to use the aircraft and chargers for moving manufactured and repaired organs for human transplantation.

The initial charging network includes Bentonville, Arkansas, home to Wal Mart's headquarters. Because the planes take off and land vertically, the stations are not limited to traditional airports.

By the numbers: UPS has ordered 10 aircraft with an option for 140 more. It has also reserved the right to buy Beta's charging stations and sees eVTOL as a way to improve service to smaller markets while reducing its emissions.

Electric aviation startup Beta Technologies raises $375 million

The company is pursuing eVTOL planes and a charging network that can scale.

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