U.S. Justice Department Sues to Block American Airlines-JetBlue Alliance

[Editor’s note, Sept. 21] This report has been updated throughout from a previous version.

The U.S. Department of Justice and seven state attorneys general have filed a civil antitrust suit to undo American Airlines and JetBlue’s partnership, calling it a “de facto merger” between the carriers in Boston and New York.

The lawsuit claims that the carriers’ Northeast Alliance, which combines their operations at Boston and the three major New York airports, would eliminate competition between American and JetBlue both in those cities and across the rest of the United States, due to a diminished incentive by JetBlue to compete with American elsewhere. The DOJ filed the lawsuit in the District of Massachusetts, with attorneys general from Arizona, California, Florida, Massachusetts, Pennsylvania, Virginia and Washington, D.C., signing onto it.

“In an industry where just four airlines control more than 80 percent of domestic air travel, American Airlines’ ‘alliance’ with JetBlue is, in fact, an unprecedented maneuver to further consolidate the industry,” U.S. Attorney General Merrick Garland said in a statement. “It would result in higher fares, fewer choices and lower quality service if allowed to continue.”

The alliance in January received approval from the U.S. Department of Transportation with some concessions, including a requirement to divest some slots at Washington Reagan National and New York’s John F. Kennedy airports. That was in the last days of the Trump administration, however, and the Biden administration is operating under an executive order earlier this summer “promoting competition in the American economy.”

In a statement provided to BTN, American Airlines countered the claim that its alliance was anticompetitive. Since February, the alliance has resulted in 58 new routes out of JFK, LaGuardia, Boston and Newark and 18 new international routes that either have launched or will start by 2022, according to the carrier.

American Airlines chairman and CEO Doug Parker also rebutted claims that the alliance was tantamount to a merger, emphasizing that the carriers are remaining independent.

“Before the alliance, Delta and United dominated the New York City market,” Parker said in a statement. “The [Northeast Alliance] has created a third, full-scale competitor in New York and is empowering more growth in Boston. Ironically, the Department of Justice’s lawsuit seeks to take away consumer choice and inhibit competition, not encourage it.”

JetBlue CEO Robin Hayes in a statement said the alliance is essential for the airline to be able to compete in New York.

“There are no slots available at [LaGuardia] and JFK, and it remains extremely difficult to grow in Newark given gate and space constraints,” according to Hayes. “Delta and United—with large international networks, ample financial resources, and significant airport gate and slot holdings—have a lock on the market and make it impossible for an airline like JetBlue to grow and introduce sorely needed low-fare competition.”

He added that the carriers will continue to implement the alliance despite the lawsuit and said DOJ “is sure to face an uphill battle” in court. 

The lawsuit is the second action in recent weeks showing the Biden administration plans to take a hands-on approach regarding airline competition. Last week, U.S. DOT issued a notice that it plans to identify a low-cost or ultra-low-cost carrier to operate 16 peak afternoon or evening slots at Newark to “provide air travelers with more choices and lower prices,” according to Deputy Transportation Secretary Polly Trottenberg.

DOT also is working on rules to enhance passengers’ rights when they decide to cancel a flight that is still operating because of government restrictions and to increase transparency of ancillary fees, according to the department.

The Wall Street Journal first reported the lawsuit.