(AP) – The Justice Department and officials from six states have filed a lawsuit to block a partnership formed by American Airlines and JetBlue, saying it would reduce competition and lead to higher fares.
The Justice Department said on Tuesday that the deal would eliminate significant competition in New York and Boston and reduce JetBlue’s incentive to compete with Americans in other parts of the country.
Attorney General Merrick Garland said the lawsuit was aimed at ensuring fair competition that allows Americans to fly affordably.
“In an industry where just four airlines control over 80% of domestic air travel, American Airlines’ alliance with JetBlue is, in fact, an unprecedented move to further consolidate the industry,” Garland said in a report. communicated. “It would mean higher prices, less choice and lower quality service if it were allowed to continue. “
American and JetBlue have vowed to fight the lawsuit and continue their alliance unless a court orders them to stop.
American and JetBlue announced their deal last year and have already started coordinating their flights in the Northeast. They argue that this is a consumer-friendly deal that has already helped them launch 58 new routes from four airports in New York and Boston, add flights on other routes and plan to new international destinations.
US CEO Doug Parker said blocking the deal “would take away consumer choice and inhibit competition, not encourage it.” This is not a merger: American and JetBlue are – and will remain – independent airlines. “
The lawsuit comes two months after President Joe Biden issued an executive order calling on government agencies to help consumers by increasing competition in the airline industry and other sectors of the economy.
The Department of Transportation approved the deal, under certain conditions, in January, during the dying days of the Trump administration. Airlines have waived certain take-off and landing slots at John F. Kennedy International Airport in New York City and Reagan Washington National Airport outside Washington, and have agreed not to cooperate to set prices.
“Instead of suing now, the (justice department) should have waited, watched and held us accountable for the benefits we said it would bring,” JetBlue CEO Robin Hayes said in an interview.
Hayes challenged the Justice Department’s belief that the deal will prevent his airline from competing with American outside of the Northeast. He noted that JetBlue this year started flying from New York to London and between Miami and Los Angeles, important routes for Americans.
Despite the green light from the Department of Transport, antitrust lawyers at the Department of Justice began to examine the agreement more closely this spring and requested interviews and documents from the airlines, according to an airline lawyer involved in the ‘case.
Over the past three weeks, it has become clear that the Justice Department is likely to take legal action, said the lawyer, who requested anonymity because discussions with regulators were private.
Airlines call their partnership Northeast Alliance or NEA. It allows American and JetBlue to sell seats on each other’s flights and offer customers reciprocal benefits under separate loyalty programs.
American and JetBlue argue the deal benefits consumers by making their combination a stronger competitor in the Northeast. Together, the airlines say, they controlled 16% of the region’s air travel market before the partnership, and that figure has risen to 24%.
The airlines argue that the Justice Department has no evidence that their deal results in higher fares. Air travel prices have been hit by the pandemic, which continues to reduce travel demand and lower fares.
American and JetBlue argue that nothing in their agreement controls prices and that each airline will continue to set its own rates.
Southwest Airlines and Spirit Airlines have filed formal complaints against the American-JetBlue alliance, arguing that with a similar West Coast deal between American and Alaska Airlines, it will make American too big.
The Justice Department lawsuit was filed in Massachusetts federal district court. The department was joined by attorneys general from California, Massachusetts, Florida, Pennsylvania, Virginia, Arizona, and the District of Columbia.