The U.S. Department of Justice announced Tuesday that they, along with Attorneys General from six states and the District of Columbia, filed a lawsuit to block what they called “an unprecedented series of agreements between American Airlines and JetBlue.”
The news was first reported by the Wall Street Journal.
The civil antitrust complaint alleges that by consolidating their operations in New York and Boston, the partnership between the two airlines — known as the “Northeast Alliance” — will eliminate competition in those cities and “harm air travelers across the country by significantly diminishing JetBlue’s incentive to compete with American elsewhere,” according to a statement from the DOJ.
“Millions of consumers across America rely on air travel every day for work, to visit family, or to take vacations,” Attorney General Merrick Garland wrote in a statement. “Fair competition is essential to ensuring they can fly affordably and safely.”
“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,” Garland continued. “It would result in higher fares, fewer choices, and lower quality service if allowed to continue.”
Garland added that the complaint “demonstrates the Justice Department’s commitment to ensuring economic opportunity and fairness by protecting consumers and competition.”
According to the DOJ, the Northeast Alliance combines the two airlines’ operations at Boston Logan, John F. Kennedy, LaGuardia and Newark Liberty airports — some of the busiest airports in the country.
The two airlines committed to coordinating on “all aspects” of network planning, per the Justice Department, “including which routes to fly, when to fly them, who will fly them and what size planes to use for each flight” — and committed to revenue sharing at those airports, which the DOJ says eliminates their incentives to compete with one another, and allow the airports to pool gates and takeoff and landing authorzations.
"According to the complaint, this unprecedented combination would raise prices and reduce choices for air passengers traveling to and from Boston and New York City," the DOJ continued.
“The Northeast Alliance would eliminate significant competition in this important industry,” Acting Assistant Attorney General Richard Powers, who oversees the DOJ's antitrust division, said in a statement. "This sweeping partnership is unprecedented among domestic airlines and amounts to a de facto merger between American and JetBlue in Boston and New York City."
Both airlines pledged to fight the lawsuit. American and JetBlue say they have started 58 new routes from four airports in the Northeast, added flights on other routes, and plan new international routes through 2022 because of the partnership.
"I don’t believe DOJ has a case they can credibly bring against JetBlue, when all we’re trying to do is bring low fares and choice," JetBlue CEO Robin Hayes told the Wall Street Journal. "If the DOJ sues us we will certainly be contesting that in court."
Hayes said his airline has been successful in New York and Boston but can’t grow much more against Delta and United because of hurdles such as the difficulty of getting more flight times at the region’s crowded airports.
“These obstacles to growth led us to an unlikely alliance with American Airlines which, even as the world’s largest carrier, also has not been able to compete with Delta and United’s dominance in the Northeast,” Hayes added.
In a statement to the WSJ, American said that the partnership provides "more choices and better service for customers with more code sharing, new international and domestic routes, better schedules and expanded frequent-flier-program benefits" and provokes "a competitive response from other carriers in the region by compelling them to step up their own products and services."
American added that the partnership is "delivering clear wins for consumers."
American CEO Doug Parker said blocking the JetBlue deal will “take away consumer choice and inhibit competition, not encourage it."
"This is not a merger: American and JetBlue are – and will remain – independent airlines," Parker said.
The states joining the lawsuit are Arizona, California, Florida, Massachusetts, Pennsylvania and Virginia, as well as the District of Columbia. The case was filed in the U.S. District Court for the District of Massachusetts.
Last week, U.S. Sen. Richard Blumenthal, D-Conn., wrote a letter to Transportation Secretary Pete Buttigieg to share his “grave concerns that the recent joint partnership between American Airlines and JetBlue Airways will lead to anticompetitive coordination at key air traffic hubs and result in the long-term inflation of airfares and related costs for airline passengers.”
“I urge the Department of Transportation (DOT) to conduct a full public interest review and investigation of the Northeast Alliance cooperative agreement,” Blumenthal continued, citing President Joe Biden's recent executive order promoting competition from July.
The Associated Press contributed to this report.