FILE PHOTO: FILE PHOTO: An American Airlines Airbus A321-200 plane takes off from Los Angeles International airport (LAX) in Los Angeles, California, U.S. March 28, 2018. REUTERS/Mike Blake
September 21, 2021
By Diane Bartz, David Shepardson and Jonathan Stempel
WASHINGTON (Reuters) -The U.S. Justice Department and six states filed an antitrust lawsuit on Tuesday against American Airlines Group Inc and JetBlue Airways Corp seeking to stop a partnership the government said could lead to higher fares in busy Northeastern U.S. airports.
The lawsuit asked a federal court in Boston to stop “Northeast Alliance” partnership, announced in July 2020 and approved by the U.S. Transportation Department shortly before the end of the Trump administration.
The Justice Department said the sweeping alliance would allow for a de facto merger in the northeast and combine the two carriers operations at four major airports: Boston Logan, John F. Kennedy, LaGuardia and Newark Liberty.
The agreement allows American and JetBlue to sell each other’s flights in their New York-area and Boston networks and link frequent flyer programs in a move aimed at giving them more muscle to compete with United Airlines and Delta Air Lines in the Northeast.
Shares of American Airlines were down 2.8 percent on Tuesday at $19.76 while JetBlue was down 4.8 percent at $14.76.
States joining the lawsuit include Arizona, California, the District of Columbia, Florida, Massachusetts, Pennsylvania and Virginia, the court records show.
“Fewer flights. More expensive tickets. Lower quality service,” said California Attorney General Rob Bonta. “…Plain and simple: American Airlines and JetBlue’s Northeast Alliance is anticompetitive.”
The Justice Department took aim at American Airlines, the largest airline in the world, saying the alliance would cost consumers hundreds of millions of dollars.
In the complaint, the Justice Department said the partnership at least partially removed JetBlue as a disruptive maverick that would work to drive down prices.
“JetBlue’s reputation for lowering fares is so well known in the airline industry that it has earned a name: the ‘JetBlue Effect’,” it said.
Elsewhere, the government said American was “not satisfied with the consolidation that has made it the largest airline in the world” and was trying “to co-opt JetBlue.”
The complaint said American chief executive Doug Parker “has cheered … successive waves of industry consolidation. When he was not cheering them, he led them. He served as CEO of America West when it merged with US Airways. Later, he served as CEO of US Airways when it merged with American. Internally, American has referred to Mr. Parker as the ‘Godfather of consolidation.’”
Parker said in a statement the lawsuit “seeks to take away consumer choice and inhibit competition, not encourage it. This is not a merger: American and JetBlue are – and will remain – independent airlines.”
JetBlue indicated in a statement that it would fight the Justice Department. “Regardless of what the DOJ claims about us in court and in the media, it’s important you know that JetBlue’s commitment to competition and low fares remains as strong as ever,” CEO Robin Hayes said in a statement, adding that the companies remained independent on pricing.
(Reporting by Diane Bartz and David Shepardson in Washington, Jon Stempel in New York; editing by Mark Porter, Steve Orlofsky and David Gregorio)
Source: One America News Network
