The U.S. Justice Department goes to court Tuesday to ask a judge to order American Airlines AAL-Q and JetBlue Airways JBLU-Q to scrap a partnership in the U.S. Northeast in a high-stakes fight that follows painful court losses for the government.
The trial, expected to last about three weeks, takes place at a time when critics say prior administrations allowed the U.S. aviation industry to become too consolidated, leading to high prices and sometimes poor treatment of consumers.
The government will argue the partnership known as the Northeast Alliance, unveiled by American Airlines and JetBlue in July 2020, meant that the two companies effectively merged their operations in Boston and New York because they pool revenue on flights into and out of Boston Logan, John F. Kennedy, LaGuardia and Newark Liberty airports.
The alliance, they will argue, will defang JetBlue, a maverick carrier that often offers better fares than legacy carriers. They will also argue that the alliance gave the two airlines more than 80 per cent market share in flights from Boston to Washington, DC and six other airports.
The companies are expected to argue that the alliance is pro-competitive because it allows the companies to better compete with Delta Air Lines and United Airlines by allowing the companies to increase capacity. JetBlue, they will say, will remain a maverick.
American is the world’s largest airline. It, Delta, United and Southwest Airlines control over 80 per cent of domestic travel, the government argues.
JetBlue Chief Executive Robin Hayes is the first witness that the government plans to call. Hayes has said that no matter how this proceeding ends up, it will be good for JetBlue’s effort to buy Spirit.
“We’ve had a better effect on lowering fares than low-cost carriers,” Hayes told Reuters earlier this year.
The trial starts after a week in which judges ruled against the government in two antitrust fights – sugar and insurance.