Department of Justice Sues to Stop American Airlines and JetBlue Alliance

In September, the U.S. Department of Justice filed a lawsuit in federal court in Massachusetts seeking to stop the planned alliance between American Airlines and JetBlue. Six state attorneys general and the District of Columbia joined the lawsuit. The complaint contends that JetBlue is a “uniquely disruptive low-cost carrier” and that proposed alliance would undermine competition on routes to and from four major airports: Boston Logan International Airport (“Boston Logan”), John F. Kennedy International Airport (“JFK”), LaGuardia Airport (“LaGuardia”), and Newark Liberty International Airport (“Newark Liberty”).1

The Department of Transportation previously approved the alliance earlier this year, after securing commitments to give up routes and slots at other airports in exchange for adopting a code-sharing arrangement in the four airports at the heart of the enforcers’ complaint.

The complaint focuses heavily on consolidation in the airline industry over the past two decades, noting that the top four airlines in 2000 controlled 55% of the market, while the top four airlines now control over 80% of the market. It also notes that JetBlue’s executives have criticized market concentration, while touting their own “JetBlue effect.” The complaint alleges that JetBlue became Boston’s leading airline by number of flights through lower prices and better service, and that it has similarly grown to a significant share at New York’s airports. That competition, according to the complaint, forced competing airlines to lower their own fares serving Boston and New York.

The complaint alleges that American and JetBlue proposed to integrate through an “alliance,” rather than a formal merger, because they knew that a merger would “invite a challenge” under Section 7 of the Clayton Act. Instead, the enforcers allege that the parties have violated Section 1 of the Sherman Act by “effectively merging their operations in Boston and New York City and eliminating competition that has resulted in substantial benefits for consumers.” They claim that the alliance will allow JetBlue and American to coordinate routes, slots, and capacity and share revenues, allowing them to undermine the current competition on many routes. 

The complaint also addresses some of JetBlue’s and American’s claims of procompetitive benefits. For example, JetBlue makes more efficient use of its “slots” in New York airports than American does, and the parties argue that the alliance will allow American to allow JetBlue use of extra slots to increase overall efficiency. But the enforcers argue that American can do so without an alliance by selling or leasing slots to JetBlue, and that in fact American had planned to do so prior to the alliance. Further, the enforcers argue that American can make better use of its own slots, rather than form the alliance with JetBlue. Similarly, the complaint alleges that the commitments made to secure Department of Transportation approval fail to safeguard competition at Boston Logan or the New York airports.

American’s and JetBlue’s answers to the complaint are due November 22, 2021.

1 United States et al. v. American Airlines Group Inc. et al., No. 21-cv-11558 (D. Mass.) Dkt. 1. 

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