The Justice Department filed suit against American Airlines and JetBlue on Tuesday, arguing that a series of “unprecedented” agreements between the two aiming to bolster operations in the Northeast would threaten competition.
The department, joined by attorneys general from six states and Washington, D.C., filed a civil antitrust complaint in a Massachusetts federal court alleging the companies’ “Northeast Alliance” created a “de facto merger” that would leave airline customers with fewer ticket options and higher fares, according to court documents.
American and JetBlue entered into the alliance to help one another secure a larger share of the highly trafficked markets in New York and Boston by establishing codeshare agreements, which allow a respective airline’s customers to purchase tickets on flights operated by the other. The agreement would also allow for reciprocal loyalty benefits.
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The agreements “create a viable third competitor” in the region, JetBlue CEO Robin Hayes said Tuesday, in competition with Delta Air Lines and United Airlines.
However, the complaint alleges that before entering the alliance, the two competitors “were poised to compete even more intensively” at the Northeastern airports, but American recognized “the significant and growing threat posed by JetBlue” and “now seeks to co-opt JetBlue through an unprecedented domestic alliance.”
“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,” Attorney General Merrick Garland said in a statement. “It would result in higher fares, fewer choices, and lower quality service if allowed to continue.”
Hayes defended the alliance, telling employees it was a way to introduce more competition into markets that Delta and United maintain a significant share of gate slots at area airports.
“While we have built a successful business in both New York and Boston, our runway for growth in the Northeast to challenge global legacy carriers Delta and United is limited. And I’m sad to say that our biggest obstacle to bringing more low fares and great service to the Northeast right now is the DOJ – the very government agency that should be making every effort to foster robust competition among airlines,” Hayes said in a note to crewmembers.
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American Airlines CEO Doug Parker also challenged DOJ’s suit Tuesday, saying the company looks forward “to vigorously rebutting the DOJ’s claims and proving the many benefits the Northeast Alliance brings to consumers.”
“This is not a merger: American and JetBlue are — and will remain — independent airlines,” Parker said in a statement.
