American and JetBlue Asks Dismissal of the Anti-trust Lawsuit

American Airlines and JetBlue Airways asked a judge to dismiss an anti-trust lawsuit filed last September. The Justice Department and six states filed the lawsuit over the airlines’ “Northeast Alliance” partnership.

Anti-Trust Lawsuit

In September, the Justice Department sued American and JetBlue saying that the Northeast Alliance is a “de facto merger”. According to the suit, this reduced the incentive for both airlines to compete in the Northeast. It also added that this will “cause hundreds of millions of dollars in harm to air passengers”.

The Justice Department said that “This sweeping partnership is unprecedented among domestic airlines and amounts to a de facto merger”.

The Justice Department’s complaint alleges that the Northeast Alliance combines operations of the two airlines.  Its anti-trust division’s acting assistant attorney general, Richard Power said that JetBlue increased flights in Boston before the formation of the Northeast Alliance. But now, Powers said that the partnership “eliminates this critical source of competition”, particularly in New York.

Northeast Alliance

The Transportation Department allowed the alliance in January just before Donald Trump ended his term. The airlines agreed to conditions that will prevent carriers from behaving in an anti-competitive manner.

The Northeast Alliance partnership will allow American and JetBlue to sell each other’s flights within Northeast US. This deal also includes the busy airports of Boston and New York City. The airlines argued that the partnership allows them to have a better chance against Delta and United in the region.

In September, American’s CEO Doug Parker said that “Ironically, the Department of Justice lawsuit seeks to take away consumer choice and inhibit competition, not encourage it”.

On Monday, American and JetBlue argued that the Justice Department and the other states failed to show proof that the Northeast Alliance hurt competition or increased fares.

The airlines wrote that “The NEA has been underway for nine months, yet Plaintiffs do not allege that it has caused a single higher price, any reduction in quality or the slightest reduction in output”.