Executives fired back after the DOJ joined with attorneys general in six states in an effort to block what JetBlue and American Airlines have termed their "Northeast Alliance." In July 2020, the two airlines agreed to sell each other’s flights and link loyalty programs at airports in New York and Boston to boost their operations in the busy travel hubs — a move the DOJ says will harm consumers.
American Airlines Chairman and CEO Doug Parker said the Justice Department’s lawsuit was "misguided." He argued the Northeast Alliance would increase, rather than hurt, competition because Delta and United have a strong presence at New York airports.
"Ironically, the Department of Justice’s lawsuit seeks to take away consumer choice and inhibit competition, not encourage it," Parker said. "This is not a merger: American and JetBlue are — and will remain — independent airlines. We look forward to vigorously rebutting the DOJ’s claims and proving the many benefits the Northeast Alliance brings to consumers."
JetBlue CEO Robin Hayes took a similar stance in a Tuesday memo to the airline’s employees. The executive said JetBlue’s "commitment to competition and low fares remains as strong as ever."
"This is not at all like a merger with American — we have two different business models and are not working together on pricing," Hayes said. "It’s also important that you have the full picture on benefits the NEA is already delivering, and I want to reassure you that the DOJ’s action will not affect our plans to continue implementing the NEA."
Arizona, California, Florida, Massachusetts, Pennsylvania, Virginia and Washington, D.C., joined the DOJ as plaintiffs in the antitrust lawsuit. Shares of JetBlue and American Airlines declined Tuesday after the lawsuit surfaced.
|AAL||AMERICAN AIRLINES GROUP, INC.||19.23||+0.08||+0.42%|
|JBLU||JETBLUE AIRWAYS CORP.||14.74||+0.10||+0.68%|
Federal officials argue the Northeast Alliance will cost American consumers hundreds of millions of dollars in higher airfares and reduced travel options. By agreeing to share revenue at the airports, JetBlue and American Airlines have eliminated their incentive to compete with each other, they added.
"Millions of consumers across America rely on air travel every day for work, to visit family, or to take vacations. Fair competition is essential to ensuring they can fly affordably and safely," Attorney General Merrick Garland said in a statement.
"In an industry where just four airlines control more than 80% of domestic air travel, American Airlines’ ‘alliance’ with JetBlue is, in fact, an unprecedented maneuver to further consolidate the industry. It would result in higher fares, fewer choices, and lower quality service if allowed to continue," he added.