JetBlue, American Airlines go to court in Justice Department’s antitrust battle

An American Airlines plane lands on the runway near a parked JetBlue aircraft at Fort Lauderdale-Hollywood International Airport on July 16, 2020 in Fort Lauderdale, Florida.

Joe Raedle | beautiful pictures

The Justice Department headed to the court in Boston on Tuesday in hopes of undoing a year-and-a-half treaty between American Airlines and JetBlue Airways in the Northeastern United States

Airlines say the deal allows them to better compete with larger airlines. But the Biden administration argues that the deal is efficiency is a fusion that will increase the fare. Last September, the Department of Justice along with the attorney generals of six states and the District of Columbia sue to block the partnershippassed in the final days of the Trump administration.

The antitrust trial will be a test of President Joe Biden’s Justice Department, which is tasked with taking a tough stance against competing threats.

However, the antitrust push has run into obstacles. Earlier this month, a federal judge rejected the Justice Department’s attempt to block UnitedHealthacquisition of Changing healthcare services. Last week, another federal judge rejected a Justice Department request to block a merger between two major US sugar refineries.

The trial against the airline alliance comes as JetBlue is in the process of trying to acquire discount carrier Spirit Airlines for $3.8 billion to create the country’s fifth-largest airline, a deal. favorable to face high barriers to regulatorseven though that settlement is not part of the lawsuit.

JetBlue, a quirky New York-based airline that identifies as a low-cost airline but also offers premium products like its premium Mint class, and last year launched flights to London from New York and Boston. It has moved into a partnership and is now a potential acquisition to grow.

“I think what we’ve seen through this case and through the Spirit merger is that management believes they have a challenge to growth,” said Samuel Engel, an aviation analyst at consulting firm ICF. scale growth and they think the natural growth rate is too slow.”

The airlines’ Northeast alliance allows them to share revenue, coordinate routes and sell seats on each other’s planes, which airlines say will help them better compete with rivals. prime minister United Airlines and Delta Airlines in congested airspace in and around New York City and Boston.

American and JetBlue have about 31% of all seats departing from the main airports serving New York City, while United has 24% and Delta has 22%, according to ICF data. In Boston, NEA carriers have 45% of all departure seats on Delta’s 24% and United’s 8%.

The alliance “will eliminate significant competition between American and JetBlue that has resulted in lower fares and higher-quality service for consumers to and from those airports,” the Justice Department lawsuit alleges. tie. “It would also tie JetBlue’s fate closely to that of Americans, reducing JetBlue’s incentive to compete with Americans in markets across the country.”

American and JetBlue, in a pre-trial summary filed on Saturday, said there was no evidence that consumers had been harmed by the union and that it allowed them to expand in limited airports. on capacity, where they can’t do it themselves.

Witnesses are expected to include top airline executives, including JetBlue CEO Robin Hayes, the first of which is scheduled for Tuesday. Other airline executives may also testify.

The trial began as Biden and other management officials took a hard line against airlines after cancellations and delays rose over the summer.

On Monday, Biden announced a proposal for a new rule to require airlines and online travel agents to provide passengers with fee information for add-ons like seat selection at the time they’re looking for fare. In the summer, the Department of Transport proposes stricter rules Refund to passengers when the flight is canceled or delayed.

“No one has ever lost a vote for criticizing airlines,” said Matt Colbert, who has managed operations and strategy at several US airlines and is the founder of consulting firm Empire Aviation Services. .

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