The US federal government along with six states filed an antitrust lawsuit against JetBlue Airways and American Airlines. Plaintiffs argue that the Northeast Alliance partnership acts as a de facto merger.
The Justice Department on Monday said that a judge shouldn’t dismiss the antitrust lawsuit against both JetBlue and American.
The Justice Department said that the Northeast Alliance “seeks to accomplish through a joint venture what would not be tolerated as a merger: eliminating significant competition between a dominant airline and a uniquely disruptive competitor.. Instead of fighting with JetBlue, American now seeks to co-opt it”.
The lawsuit is scheduled to go on trial by September next year.
The federal government argues that the partnership “will cost consumers hundreds of millions of dollars”. It added that “promised benefits do not justify these harms”.
Northeast Alliance
The partnership allows American and JetBlue to sell each other’s flights in New York and Boston. This gives them more leverage when going against United and Delta.
The airlines announced its Northeast Alliance partnership in July 2020. The Transportation Department then approved the partnership during the last months of Trump’s administration.
Motion to Dismiss the Antitrust Lawsuit
The antitrust lawsuit shows the current administration’s interest in promoting competition among airlines. Currently, American and three other major US airlines control 80% of the US domestic airline market.
Last month, American and JetBlue filed a motion to dismiss the antitrust lawsuit against the Northeast Alliance. The carriers said that “The complaint is defective as a matter of law because plaintiffs have not alleged that the NEA has actually harmed competition”. The carriers added 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”.
In its memorandum, the carriers explained that the partnership provided “consumers the benefits of a broader and deeper network at these airports—more flights and seats to more places—so that each airline can become more competitive with the dominant carriers in the Northeast”.
