US Department of Justice sues to stop American Airlines and JetBlue partnership
Together with the Attorneys General in six states and the District of Columbia, the U.S. Department of Justice (DOJ) sued to prevent a partnership formed by American Airlines (A1G) (AAL) and JetBlue (JBLU).
The lawsuit, which was filed on September 21, 2021, alleges that the alliance, which will consolidate the operations of the two airlines in Boston and New York City, will eliminate important competition in the region and will eventually harm travelers with fares that may not be competitive.
“In an industry where just four airlines control more than 80% of domestic air travel, American Airlines’ (A1G) (AAL) ‘alliance’ with JetBlue (JBLU) 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,” said Attorney General Merrick B. Garland in a DOJ statement online.
“The complaint filed today demonstrates the Justice Department’s commitment to ensuring economic opportunity and fairness by protecting consumers and competition.”
American Airlines (A1G) (AAL) and JetBlue (JBLU) announced their “Northeast Alliance” in 2020 which combines the two airlines’ operations at four major airports: Boston Logan, John F. Kennedy, LaGuardia and Newark Liberty.
The two airlines will also share revenues earned at these airports, eliminating their incentives to compete with one another. The Northeast Alliance will allow the parties to pool their gates and takeoff and landing authorizations, known as “slots.” The DOJ says that this unprecedented combination would raise prices and reduce choices for air passengers traveling to and from Boston and New York City.
According to the complaint filed, American is the largest airline in the world. Just four airlines — American, along with Delta, United and Southwest — collectively control over 80% of domestic air travel.
The complaint alleges that JetBlue (JBLU) has positioned itself as an important source of competition against American and the other large airlines, particularly in the northeast.
The DOJ believes that the so-called Northeast Alliance will cause hundreds of millions of dollars in harm to air passengers across the country through higher fares and reduced choice. The complaint also says that prior to entering the Northeast Alliance, JetBlue (JBLU) and American both planned to compete more intensely with one another, including in Boston and New York City, but also in other areas.
The lawsuit was filed in federal district court in Massachusetts, and the DOJ was joined by the attorneys general of California, Massachusetts, Florida, Pennsylvania, Virginia, Arizona and the District of Columbia.
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