American Airlines and JetBlue announced a merger to create the largest airline in the United States. The Department of Justice filed a lawsuit to block the merger, claiming that it would lead to higher prices for consumers and less competition.
The American-JetBlue Alliance is a proposed merger between American Airlines and JetBlue Airways. This merger would create the largest airline in the United States. Read more in detail here: american airlines.
The partnership between American Airlines and JetBlue Airways, which was established more than a year ago, is now facing more than just criticism — it’s being sued.
The Department of Justice, together with six states and the District of Columbia, filed an antitrust action to prevent the collaboration, claiming that it would reduce competition and push up flight prices, especially in New York and Boston.
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According to CNBC, the partnership, which will focus on the Northeast, was announced in July 2020 and authorized in the last weeks of Trump’s presidency.
The partnership came under fire almost immediately after the Trump White House approved it.
The agreement enables the airlines to coordinate schedules solely within the area, but not prices. The deal seeks to compete with competitors at four airports in the New York City region and Boston, both of which are JetBlue hubs. Part of the complaint said, “By combining their businesses in this manner, American and JetBlue would essentially combine their operations on flights to and from the four airports—which together account for two-thirds of JetBlue’s revenue.”
The deal also enables American and JetBlue to sell one other’s flights to and from the area, as well as enabling passengers to earn and burn frequent flyer points on both airlines.
The lawsuit, filed in federal court in Massachusetts, claims that the arrangement is illegal and would harm customers across the Northeast.
According to the complaint, “by essentially absorbing JetBlue’s operations in Boston and New York City, American may cut investments not just in those locations, but also in other areas of its network where it would otherwise retain or expand service,” “As a result, customers will have fewer choices and pay higher prices throughout the country.”
On 175 routes covered by the alliance, American highlighted 58 new routes and codeshare agreements, which enable airlines to sell each other’s flights.
In a statement, American Airlines stated, “This is not a merger: American and JetBlue are – and will be – separate airlines.” “We look forward to aggressively refuting the DOJ’s allegations and demonstrating the Northeast Alliance’s many consumer benefits.”
In a statement, JetBlue CEO Robin Hayes stated, “(The Northeast Alliance) offers an unparalleled potential to expand in New York, develop fast, and bring more cheap fares to more locations.” “We are very convinced that the facts are on our side, that the DOJ lacks substantial evidence to back up their claims, and that we will win in court.”
The US, Arizona, California, Florida, Massachusetts, Pennsylvania, Virginia, and the District of Columbia filed the lawsuit.
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