WASHINGTON – The United States Justice Department (DoJ) yesterday filed a suit to block an alliance between American Airlines and JetBlue that it said will harm travellers by reducing competition.
“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 manoeuvre to further consolidate the industry,” said Attorney-General Merrick B. Garland in a statement.
Attorneys-general in six states and the District of Columbia have joined the suit over the Northeast Alliance (NEA).
The companies announced the deal in July last year at a time when carriers were struggling to survive amid the collapse of travel during the Covid-19 pandemic. It would consolidate routes through Boston and the three New York airports.
But, Garland said the deal “would result in higher fares, fewer choices, and lower-quality service if allowed to continue”.
The complaint noted that American Airlines is the largest carrier in the world, and together with competitors Delta, United and Southwest, controls nearly all US passenger air travel.
Unable to complete former mergers, American Airlines “has relentlessly pursued a strategy of industry consolidation in the US and around the world”, said the statement.
American Airlines chairman and CEO Doug Parker said the alliance has delivered “clear consumer benefits”.
“Ironically, the DoJ suit seeks to take away consumer choice and inhibit competition, not encourage it,” he said in a statement, adding that the firm will be “vigorously rebutting DoJ’s claims”.
American Airlines in a separate statement said “before the alliance, Delta and United dominated the New York City market. NEA has created a third, full-scale competitor in New York, and is empowering more growth in Boston”.
“This is not a merger: American Airlines and JetBlue are – and will remain – independent airlines,” it added.
However, acting assistant attorney-general Richard Powers said the partnership “will closely tie JetBlue’s fate to that of American Airlines, significantly reducing JetBlue incentives to compete with its much larger partner in the northeast and beyond”.
Powers, of DoJ’s antitrust division, added: “Consumers will be better off if American Airlines and JetBlue continue to be fierce competitors, not allies.”
The attorneys-general of Arizona, California, Florida, Massachusetts, Pennsylvania, Virginia and the District of Columbia joined the suit calling for the partnership to be blocked. – AFP, September 22, 2021
