US Appeals To Suspend Transactions Between American Airlines And JetBlue – Floridanewstimes.com

(AP)

Justice Department and six state officials have filed proceedings to block the partnership between American Airlines and JetBlue, claiming to reduce competition and raise fares.

The Justice Department said Tuesday that the deal would eliminate significant competition in New York and Boston and reduce the incentive for JetBlue to compete with Americans elsewhere in the country.

Attorney General Merrick Garland said the proceedings were about ensuring fair competition that would allow Americans to fly at affordable prices.

“In an industry where only four airlines control more than 80% of domestic air travel, American Airlines’ partnership with JetBlue is, in fact, an unprecedented ploy to further integrate the industry.” Garland said in a statement. “If you are allowed to continue, the fares will be higher, you will have fewer options and the quality of service will be reduced.”

American Airlines and JetBlue have vowed to fight the proceedings and continue the alliance unless the court orders them to stop.

American Airlines and JetBlue Airlines announced a deal last year and have already begun coordinating flights in the northeast. It’s a consumer-supporting arrangement that has already helped them launch 58 new routes from four airports in New York and Boston, add flights to other routes, and plan new international destinations. Claims to be.

Blocking transactions “deprives consumers of choice and discourages competition, but does not encourage it,” said Doug Parker, CEO of the United States. This is not a merger. American Airlines and JetBlue Airlines are independent airlines and will continue to exist. “

The proceedings come two months after President Joe Biden issued an executive order calling on government agencies to help consumers by intensifying competition in the aviation industry and other economic sectors.

The Department of Transportation approved the agreement under certain conditions in January, the final day of the Trump administration. The airline has given up takeoff and landing slots at John F. Kennedy International Airport in New York and Washington Reagan National Airport on the outskirts of Washington and has agreed not to cooperate in pricing.

“Instead of filing a proceeding now, the (Ministry of Justice) should have held, monitored, and held us accountable for the benefits we said it would bring,” said JetBlue CEO Robin Hayes. Hayes said in an interview.

Hayes disputed the Justice Department’s belief that the deal would prevent his airline from competing with non-Northeast Americans. He said JetBlue began flying important routes for Americans this year from New York to London and between Miami and Los Angeles.

Despite the green light from the Ministry of Transport, the Justice Department’s antitrust lawyer began scrutinizing the deal more closely this spring, requesting interviews and documents from the airline, according to airline lawyers involved in the case. ..

The lawyer, who spoke on condition of anonymity, was more likely to file a proceeding with the Justice Department in the past three weeks, as the talks with the regulator were private.

Airlines call their partnership the Northeast Alliance or NEA. This allows American Airlines and JetBlue Airlines to sell seats on each other’s flights and bring mutual benefits to their customers through separate frequent flyer programs.

American Airlines and JetBlue argue that the deal is in consumer favor by making their combination a stronger competitor in the northeast. Prior to the partnership, it dominated 16% of the region’s air travel market, but it has grown to 24%, according to airlines.

Airlines claim that the Justice Department has no evidence that their agreement has led to higher fares. Air travel prices have been hit by pandemics, which continue to reduce travel demand and push fares down.

American Airlines and JetBlue argue that their transactions have no control over pricing and that airlines continue to set their own fares.

Southwest Airlines and Spirit Airlines have filed a formal complaint against the American JetBlue Alliance, but claimed that American Airlines would grow too large, with similar deals between American Airlines and Alaska Airlines on the West Coast. ..

The Justice Department proceedings have been filed in the Federal District Court of Massachusetts. The division has joined the Attorney General of California, Massachusetts, Florida, Pennsylvania, Virginia, Arizona, and the District of Columbia.

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