U.S. antitrust enforcers sued
The Justice Department and a group of state attorneys general filed the lawsuit in federal court in Boston, saying the so-called Northeast Alliance is a de-facto merger of the airlines’ operations in New York and Boston.
“The alliance will harm travelers in the northeast U.S. and nationwide through higher fares, reduced choice and lower-quality service,”
Questions about the alliance have increased since President Joe Biden’s July executive order sought to increase competition broadly. It called out the airline industry, among others, and said the Transportation and Justice departments must consult on how consolidation has affected passengers, as well as review the award of flying rights at congested airports.
American Chief Executive Officer
“They’re wrong, and we’ll prove it,” Parker said Tuesday in an online interview with the Washington Post. “It’s disappointing. We feel really good about what we’re doing for consumers. We’ll defend it and I feel quite certain we will prevail.”
JetBlue Chief Executive Officer
The venture includes a code-sharing agreement that enables the carriers to book travelers on each other’s flights and offer reciprocal loyalty-program benefits. Passengers can use either airline’s website to buy a single itinerary that includes flights on both airlines. The alliance focuses on the Boston-New York corridor.
JetBlue shares dropped 4.8% in New York trading while American fell 2.8%.
The pact was approved by the Transportation Department in the final two weeks of the Trump administration, and American and JetBlue already have put key portions of the venture in place, including adding or announcing 58 new routes from airports covered by the alliance.
The two carriers say that by working together, they can compete more effectively against
To get Transportation Department approval of the alliance, the airlines agreed to
“We would not be shocked if DOJ asks for additional slot divestitures, but we ultimately expect American and JetBlue to fight back,”
JetBlue and American are prohibited from discussing certain topics, including fares or revenue management strategy in any context, and outside of the alliance’s purposes, they can’t discuss route, schedule and capacity decisions.
“We have heard similar claims of benefits in prior mergers and they have not materialized, leading consumers to pay more for less,” said Powers from the Justice Department. “Consumers will be better off if American Airlines and JetBlue continue being competitors, not allies.”
(Updates with comments from DOJ in third paragraph, JetBlue comment in seventh paragraph, and analyst Cunningham.)
Tony Robinson, Kevin Miller
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