A court has announced today that the US Justice Department's antitrust lawsuit against American Airlines and JetBlue would proceed. The date for the trial in the case has been set for September 26th of this year.
The federal government filed a motion in September at the federal district court for the District of Massachusett, asking Judge Leo Sorokin to order the airlines to end their Northeast Alliance partnership. The motion was backed by states of Arizona, California, D.C., Florida, Massachusetts, Pennsylvania, and Virginia, who joined the federal government in the suit.
The agreement permits American and JetBlue to sell the other's flights on their New York-area and Boston networks and link frequent flyer programs. The lawsuit claims the alliance leads to anticompetitive behavior and higher fares in slot-constrained Northeastern airports.
However, the two airlines argue that the agreement gives them more bargaining power and collective capacity to compete with the region's dominant players, United Airlines and Delta Air Lines. A spokesperson for American Airlines expressed optimism for the upcoming proceeding when reached by Simple Flying for comment:
“We look forward to the opportunity to demonstrate the significant consumer benefits and increased competition enabled by the Northeast Alliance.”
American Airlines and JetBlue denied wrongdoing and motioned to dismiss the lawsuit. The court said in its decision today that it takes no position on if the plaintiff's claims would hold up in September, its only current concern being the motion to dismiss.
The Northeast Alliance partnership's beginnings.
The initial approval required JetBlue and American to agree to a series of compromises with the DOT to allow the Northeast Alliance to move forward. Requirements included commitments on network and service levels, limits on communication between organizations, regular reporting to the DOT, and slot divestitures.
The final agreement required American and JetBlue to divest at least seven pairs of slots at New York JFK and six pairs at Washington's Reagan National Airport (DCA) as a condition of its approval. The two airlines are also not allowed to coordinate on pricing.
The alliance is lauded by both airlines as being exceptionally successful. The collaboration allows American Airlines to exchange slots with JetBlue between airports, enabling more route options for customers. American Airlines is consolidating at New York's John F. Kennedy International Airport (JFK), while JetBlue has been expanding its route network out of JFK, LaGuardia Airport (LGA), and Newark Liberty International Airport (EWR).
The alliance today and going forward.
The agreement was highlighted by American Airlines as instrumental when recently announcing a flurry of new routes. In addition to long-haul routes to New Zealand and Uruguay, the carrier is launching six new routes in conjunction with the Northeast Alliance. Flyers out of LaGuardia Airport will now be able to fly year route to Little Rock, Arkansas (LIT) and Tulsa, Oklahoma (TUL), along with seasonal flights to Asheville, North Carolina (AVL) and Key West, Florida (EYW).
Passengers departing from JFK see the addition of year-round flights to Monterrey, Mexico (MTY), and the British overseas territory of Bermuda (BDA). In total, JetBlue expects a peak of 500 flights per day arriving in New York this year to be operated by the Northeast Alliance.
JetBlue emphasized the increased competition since launching the alliance and saw the airline grow to its most prominent position ever at LaGuardia. In a statement, the airline said that it believed that the Northeast Alliance delivered significant benefits to consumers and would continue to present a solid case at the upcoming court date:
Our Northeast Alliance with American Airlines is delivering significant benefits to customers by creating a third viable competitor in the Northeast. We are confident the court will rule in our favor after we present the facts this September.
Fellow low-cost carrier Spirit also previously expressed concerns that the American-JetBlue alliance leads to the suppression of competition. The carrier suggested the agreement enables higher airfares for customers and harms consumers in four of the most competition-constrained domestic markets.
Source: Reuters