DOJ sues to block ‘de facto merger’ between American Airlines, JetBlue

The Biden Justice Department is suing to block American Airlines and JetBlue from consolidating operations in Boston and New York City, arguing it would cause hundreds of millions of dollars in harm to travelers.

In a civil antitrust lawsuit filed Tuesday, the DOJ claims the so-called “Northeast Alliance” would eliminate important competition because prior to the agreement, the airlines had planned to compete more “intensely” with one another in the two cities and elsewhere.

“The Northeast Alliance will dampen American’s incentive to expand service elsewhere in its network and will significantly reduce JetBlue’s incentives to challenge its much larger partner across the country,” according to the department.

Richard Powers, acting attorney general of the Antitrust Division, said the “sweeping partnership is unprecedented among domestic airlines and amounts to a de facto merger.”

The DOJ complaint also argues it would “further consolidate an already highly concentrated industry” because American Airlines is among four companies — including Delta, United and Southwest — that control 80% of domestic air travel.

Attorney General Merrick B. Garland said the “unprecedented maneuver” would result in higher fares, fewer choices and lower quality service.

“Millions of consumers across America rely on air travel every day for work, to visit family, or to take vacations,” Mr. Garland said. “Fair competition is essential to ensuring they can fly affordably and safely.”

The DOJ filed the suit in the U.S. District Court of Massachusetts along with attorneys general from Arizona, California, Florida, Massachusetts, Pennsylvania, Virginia and the District of Columbia.

It is the latest effort by the Justice Department to show the attorney general’s commitment to “reinvigorating antitrust enforcement.

JetBlue CEO Robin Hayes said “while it’s extremely unfortunate DOJ would rather take us to court than help us compete, we’re ready to make a strong case on why more low-fare JetBlue growth is good for customers.”

“We fully expect the court to find that nothing about the [agreement] changes our business model or our role as a force for good in the industry,” Mr. Hayes said in a statement on Tuesday. 

The Washington Times sent requests for comment on Tuesday to American Airlines and JetBlue. 

Hours before the lawsuit was announced, Associate Attorney General Vanita Gupta spoke to the National Farmers Union about efforts to combat ongoing anti-competitive actions within the agriculture industry.

Ms. Gupta said consolidation in agricultural markets “has reached a tipping point, making it hard for small family farms and growers to survive.”

“Farmers are being forced to bargain with large processors when they buy and sell goods, squeezing your profits while Americans pay more at the grocery store,” she said.

Ms. Gupta said the department is working to combine its law enforcement abilities with the USDA’s regulatory abilities to ensure fairer markets for farmers and ranchers.

“I firmly believe that vigorous antitrust enforcement is an essential part of addressing many of these problems,” she said. “American farmers aren’t asking for a handout. They want an opportunity to compete on a level playing field.”