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But the DOT has not opened the deal to public comment, and its disclosures do not indicate whether the joint venture has been reviewed by the Department of Justice, which normally gives its opinion on potential competition concerns posed by the alliances. of airlines. The DOT also failed to clarify that the slots that American and JetBlue sell as a condition of the alliance go to low-cost carriers, a departure from the way the Obama administration has handled similar arrangements.
The deal comes as airlines are reeling from the financial effects of the pandemic. But consumers will feel the effects for years to come, say critics of the deal.
“I am concerned that the Department of Transportation approved the US / JetBlue alliance without meaningful public participation just days before a new administration began,” said Senator Amy Klobuchar (D-Minn. ), Who should chair the Senate Judiciary Committee. antitrust subcommittee, told POLITICO. “While airlines and airline employees need support to navigate this crisis, it should not come at the expense of consumers.”
Low-cost carrier Spirit Airlines has filed a complaint with the DOT about the deal, and Klobuchar urged the administration of President-elect Joe Biden to reconsider the decision.
The ministry defended its review of the agreement, adding that “the alliance remains subject to all applicable federal and state antitrust laws.”
American, the leading airline in the United States in terms of the number of passengers carried, announced the proposed alliance with JetBlue in July. The partnership will allow customers to book tickets covering the routes and schedules of both airlines and benefit from reciprocity if they travel frequently with one of the airlines. These types of agreements are more common between international and non-national airlines.
In an agreement dated January 10 between airlines and DOT, American and JetBlue have pledged not to communicate with each other about the prices they collectively bill and cede seven slots at John F. Kennedy International Airport in New York and six at Ronald Reagan National Airport in Washington.
In most cases, when airlines propose alliances, the DOT opens a public proceeding in which rivals, trade groups, unions and others can comment and suggest remedies for any lost competition. This did not happen with the American joint venture and JetBlue.
Spirit Airlines filed a complaint last week with the DOT on the lack of public procedure. According to Spirit, a “conservative” estimate of the partnership would lead consumers to pay an additional $ 383 million each year for airfare, a 5% price increase.
A DOT spokesperson said the department was following normal procedure, adding that the department “does not generally conduct public proceedings for reviews of code-sharing or alliance agreements under” the statute that applies. to the American-JetBlue agreement. The department will review Spirit’s complaint “in a timely manner” and decide whether an investigation is warranted, the person added.
At Reagan National, American and JetBlue will account for 60% of available slots, according to Spirit. At JFK, American-JetBlue and Delta, the airport’s second largest carrier, will operate 80% of the slots; at LaGuardia in New York, they will run at 81%. Although Boston’s Logan International Airport is less constrained, the pair will control the majority of flights and in some markets will be the only carriers available, Spirit said.
American and JetBlue combined “are essentially monopolists at DCA and duopolists with Delta at JFK and LGA, and with United at [Newark] EWR, with no possibility of re-entry at any of those airports or even in Boston where there are virtually no ground facilities available, ”Spirit said.
In a Jan. 11 letter supporting Spirit’s complaint, Southwest noted that JetBlue acquired many of its slots at National and LaGuardia from American Airlines after the Department of Justice demanded divestments for American to merge with US. Airways in 2013. This process attracted close scrutiny from Congress at the time, with more than 100 members of the House urging the Obama administration to preserve non-stop flights to and from DCA.
“If American and JetBlue coordinate their services at these airports as the press reports indicate, JetBlue would obviously no longer be considered independent. [low-cost carrier] provide competitive discipline to US or other legacy carriers, ”Southwest said in his letter this week.
JetBlue and American did not respond to requests for comment. The Department of Justice, which normally plays a key role in determining competitive prejudice in these types of agreements, declined to say whether it was involved in the DOT review or whether it had concerns over subject of the alliance.
Diana Moss, president of the American Antitrust Institute, said she was “very skeptical” that the American-JetBlue partnership will benefit consumers.
“The low cost carriers, which are declining due to consolidation, are really the key to protecting and promoting competition and consumers,” said Moss, who has researched how airline mergers and alliances increase prices. “The biggest concern about this alliance is that it makes it more difficult for low cost carriers to gain a foothold in the market.”
But industry analysts were less convinced the partnership would have a significant impact on air travel options, with the exception of Reagan National.
Airline industry analyst Robert Mann called comments against the deal “sour grapes.” Airlines like Spirit and Frontier would like to expand their low cost service but have struggled, especially at LaGuardia, he said.
Still, Mann said low-cost airlines could still “trade horses” for highly sought-after slots at LaGuardia or try to salvage slots sold at auction.
The DOT did not specify that the divested slots should go to low-cost carriers, travel industry analyst Henry Harteveldt said, which is unusual.
“The Obama administration clearly had a stronger view on keeping low fare competition at an airport where you had a limited number of highly prized assets,” Harteveldt said. “I was both surprised that the DOT didn’t want these slots designated for a low cost or low cost airline, but not surprised because Elaine Chao was very free.”
He said that without the DOT specifying a role for a low-cost service, a large carrier could easily Pick up the “very valuable, very valuable” slots that the Americans and JetBlue give up if the DOT decides to open the auction. Delta said on an earnings call this week that it would be interested in the slots released.
Chris Brown of the National Air Carriers Association, which represents low cost carriers Spirit, Allegiant, Frontier and Sun Country, said the ministry may have felt the need to act quickly due to the pandemic, but ultimately the decision is short-sighted.
“This is a case where they steal Peter to pay Paul,” said Brown, vice president of government affairs and ultra low cost carrier policy. “We believe that the negative consequences far outweigh the benefits.”
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