An antitrust complaint against American Airlines and JetBlue was launched on Tuesday, claiming that a developing partnership between the two airlines has resulted in a “de facto merger” in the markets of New York City and Boston, resulting in lower competition and more damage to customers as a consequence.
It claimed that the agreement between the airlines decreased their motivation to compete in the Northeast and elsewhere, and that it would cause “hundredss of millions of dollars in damage to air customers throughout the nation” via increased prices and less choice.
With this move, the Biden administration is making yet another attempt to promote competition while also limiting the power of big corporations via antitrust litigation. However, it comes at a time when airlines are attempting to get back on their feet after the epidemic decimated their revenue and earnings. Also rejecting the lawsuit’s premise is that the two airlines’ collaboration actually helps boost competition against Delta Air Lines and United Airlines, as well as at New York’s airports.
The Transportation Department gave its approval to the partnership in January, only a few weeks before Vice President Biden assumed office. Under the terms of this agreement, the airlines agreed to a set of restrictions designed to ensure that the carriers would not engage in anticompetitive behaviour.
The Justice Department’s primary claim is that the partnership would prohibit JetBlue from bringing the kind of intense competition to New York airports that has, according to the Justice Department, resulted in significant savings for passengers at other airports.
On a conference call with reporters on Tuesday, Richard A. Powers, an acting assistant attorney general in the Justice Department’s antitrust division, stated that JetBlue’s increased flights into and out of Boston had forced other airlines to lower their fares in the years before the alliance was formed. Now, he claims, the collaboration between JetBlue and American has “eliminated this key source of competition,” especially in the New York market.