United States continues American Airlines and JetBlue partnership
WASHINGTON, Sept.21 (Reuters) – The US Department of Justice and six states on Tuesday filed an antitrust lawsuit against American Airlines Group Inc (AAL.O) and JetBlue Airways Corp (JBLU.O) seeking to end a partnership that the government says could lead to higher fares at busy airports in the northeastern United States.
The lawsuit called on a federal court in Boston to stop the “Northeast Alliance” partnership, announced in July 2020 and approved by the US Department of Transportation shortly before the end of the Trump administration. He was targeting American Airlines, the world’s largest airline, saying the alliance would cost consumers hundreds of millions of dollars.
“Fewer flights. More expensive tickets. Lower quality service,” said California Attorney General Rob Bonta, whose state was one of those who joined the lawsuit. “Plain and simple: American Airlines and JetBlue’s Northeast Alliance are anti-competitive. “
Shares of both airlines closed lower and both pledged to fight the lawsuit, which dealt a serious blow to a deal that could help both companies profit as the pandemic has brought down sales and where the outlook for air travel remains bleak.
JetBlue CEO Robin Hayes argued the alliance had in fact lowered fares for the northeastern United States and said the airlines were competing vigorously elsewhere.
“The DOJ has chaired an unprecedented consolidation to create four major airlines,” said Hayes, noting that blowing up the alliance would mean JetBlue would lose access to slots owned by American. If the government wins, “JetBlue is the biggest loser out there and they give all that niche and all that power back to (American).”
The lawsuit also signals the Biden administration’s interest in trying to inject more competition where American and three other airlines control 80% of the domestic air market.
The Justice Department said the radical alliance would create a de facto merger in the northeast and combine the operations of the two carriers at four major airports: Boston Logan, John F. Kennedy, LaGuardia and Newark Liberty.
The deal allows American and JetBlue to sell each other their flights in their New York and Boston area networks and connect frequent flyer programs in a bid to give them more strength to compete with United Airlines (UAL.O ) and Delta Air Lines (DAL .N) in the North East.
American Airlines shares closed down 2.8% at $ 19.76 while JetBlue was down 4.8% at $ 14.76.
States joining the trial include Arizona, California, District of Columbia, Florida, Massachusetts, Pennsylvania and Virginia, according to court records.
The Justice Department complaint said the partnership at least partially suppressed JetBlue as a disruptive maverick that would help drive prices down.
“JetBlue’s reputation for lowering fares is so well known in the airline industry that it has earned a name: the ‘JetBlue effect’,” he said.
Elsewhere, the government said American was “not happy with the consolidation that made it the world’s largest airline” and was trying “to co-opt JetBlue.”
According to the complaint, US Managing Director Doug Parker “applauded (…) the successive waves of industry consolidation. When he was not encouraging them, he was leading them. He was CEO of America West during his merger with US Airways CEO of US Airways when it merged with American Internally, American has called Parker a “godfather of consolidation.”
Parker said in a statement that the lawsuit “seeks to deprive consumers of choice and to inhibit competition, not to encourage it. This is not a merger: American and JetBlue are – and will remain – companies. independent aerials “.
Reporting by Diane Bartz and David Shepardson in Washington, Jon Stempel in New York; edited by Mark Porter, Steve Orlofsky and David Gregorio
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