Federal antitrust attorneys head to court Tuesday against
The trial, expected to last through mid-October, will determine the future of the American and JetBlue partnership, which allows the airlines to share flights and customers. It may also affect JetBlue’s $3.8 billion proposed acquisition of
This is the first US challenge to an airline partnership since President
The DOJ is under pressure to have something to show for its trust-busting efforts after the collapse last week of two of its cases, one targeting
The stepped-up scrutiny follows years in which federal regulators routinely approved airline consolidation, aided by a series of bankruptcies, that eliminated five of the 10 biggest airlines between 2005 and 2013. Concerns over too much control in some markets most often have been settled through agreements to shed gates or flight slots in congested airports.
Under the American-JetBlue partnership, called the Northeast Alliance, the airlines have a code-sharing agreement that allows them to book on each other’s flights and offer some reciprocal loyalty-program benefits. Passengers can use either company’s website to buy a single itinerary that includes flights on both airlines. The airlines say they’ve added 50 new routes they didn’t previously fly in the 18 months the alliance has been operational, and have increased frequencies on another 130 routes.
Control of New York and Boston
The Justice Department and attorneys general for six states allege the partnership allows American, the biggest US airline, to effectively take over its most disruptive rival, JetBlue. The joint venture between the airlines will cost consumers hundreds of millions in higher fares each year, the department says, particularly on flights to and from New York City and Boston, where the carriers account for more than 50% of flights on dozens of routes.
The companies are defending the commercial partnership, which has allowed American to increase its presence at New York’s major airports after previously reducing flying at Kennedy and LaGuardia. American customers have access to dozens of JetBlue flights out of New York and Boston as part of the alliance.
The partnership also let JetBlue expand service, gaining access to coveted gates and flight slots in New York held by American that the smaller carrier hadn’t been able to secure on its own. JetBlue has used the alliance to attract more business passengers in Boston, where the carrier has been fending off expansion by larger rival
Both airlines say they still compete in other regions of the US and to London, a lucrative business and leisure market that JetBlue entered last year. It’s now flying between New York and Boston to Heathrow and Gatwick airports in London.
JetBlue Chief Executive Officer
The planned $3.8 billion Spirit acquisition requires approval from US antitrust regulators before it can move forward -- and the deal is likely to come up at the trial. Justice Department lawyers say that the problems created by the Northeast Alliance would only be exacerbated by JetBlue’s bid to buy Spirit.
The JetBlue-Spirit merger “risks placing not one, but two low-cost airlines under the thumb of AA,” prosecutors said in a court filing. “Passengers will suffer if AA, the largest airline in the world, is permitted to co-opt one -- and now maybe two -- of its most disruptive rivals.”
Spirit must continue operating independently and outside the Northeast Alliance until the carrers receive
American Airlines CEO
Executives from Spirit, Delta,
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Graham Starr, Marie Monteleone
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