Willie R. Tubbs, FISM News
The United States Department of Justice is suing to prevent American Airlines and JetBlue from partnering in their New York and Boston operations.
On Tuesday, the Department of Justice, in conjunction with the attorneys general of six states and the District of Columbia, filed a civil antitrust lawsuit alleging the two airlines’ proposed “Northeast Alliance” posed a threat to prices and competition in air travel across the country.
The Department of Justice argues that not only would JetBlue cease to compete with American Airlines in the Boston and New York markets, it would be disincentivized from competing with American Airlines anywhere.
“Fair competition is essential to ensuring they can fly affordably and safely,” U.S. Attorney General Merrick B. Garland said in a press release. “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.”
American Airlines has responded by calling the suit misguided and, through a statement by CEO Doug Parker, said the alliance has brought about an expansion of services to customers.
“Delivering on the promise of growth, the Northeast Alliance will offer more than 700 daily flights from New York and Boston this winter and continue investment to provide a seamless experience to customers,” Parker said.
Moreover, American Airlines argues the alliance with JetBlue will provide additional competition in Boston and New York.
“Before the alliance, Delta and United dominated the New York City market,” Parker said. “The (Northeast Alliance) 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.
“This is not a merger: American and JetBlue are – and will remain – independent airlines. We look forward to vigorously rebutting the DOJ’s claims and proving the many benefits the Northeast Alliance brings to consumers.”
The Department of Justice, though, argues that American, the largest airline in the country, is seeking to increase its power over the industry through alliances and joint ventures.
American Airlines’ desire to work with JetBlue, the Department of Justice alleges, stemmed from a desire to eliminate what is known as the “JetBlue effect”; a term coined because the comparatively lower costs of JetBlue’s services force other providers to lower their prices in order to compete.
At present, four airlines – American, Delta, United, and Southwest – control more than 4/5s of the nation’s air travel industry.
The states participating in the suit are Arizona, California, Florida, Massachusetts, Pennsylvania, and Virginia.