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The Justice Department on Tuesday sued American Airlines and JetBlue to block an “unprecedented series of deals” that will consolidate the operations of the two airlines in Boston and New York.
Why is this important: Civil antitrust complaint alleges that the planned North East Alliance (NEA) “will cause hundreds of millions of dollars in damage to air passengers across the country due to higher fares and reduced choice,” said the DOJ in a press release.
- The plan would eliminate competition in the two cities and “significantly” reduce JetBlue’s incentive to compete with American elsewhere, according to the DOJ.
Details: The alliance is a commitment to coordinate “on all aspects” of network planning, including which routes to take, when to fly them, who will fly them and what size planes to use for each flight, according to the DOJ.
- The two airlines will also share the revenues earned in Boston and New York and pool their boarding gates and take-off and landing clearances.
What they say : “In an industry where only four airlines control over 80% of domestic air travel, American Airlines’ alliance with JetBlue is, in fact, an unprecedented move to further consolidate the industry,” the attorney general said. Merrick Garland in a statement. noting that American is one of the largest airlines in the world.
- “The complaint filed today demonstrates the Department of Justice’s commitment to ensuring economic opportunity and fairness by protecting consumers and competition.”
The other side: “Prior to the alliance, Delta and United dominated the New York market, “American Airlines CEO Doug Parker said in a statement.” NEA has created third large-scale competitor in New York and is boosting growth in Boston. “
- “Ironically, the Justice Department lawsuit seeks to take away consumer choice and inhibit competition, not encourage it,” Parker said, arguing that NEA is not a merger.
- “We look forward to vigorously refuting the DOJ’s claims and proving the many benefits the Northeast Alliance brings to consumers.”
In a message to JetBlue crew members On Tuesday, CEO Robin Hayes highlighted the opportunities and growth the alliance brings.
- “While it is extremely unfortunate that the Department of Justice would rather sue us than help us compete, we are ready to make a strong case on why low-cost JetBlue growth is good for customers, ”Hayes wrote.
- “We expect the tribunal to find that nothing in the NEA changes our business model or our role as a force for good in the industry.”
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