JetBlue Airways Corporation (NASDAQ: JBLU) and American Airlines Group Inc (NASDAQ: AAL) have requested a judge to set aside an antitrust law that attorney generals from six states, the District of Columbia, and the Justice Department filed due to the Northeast Alliance collaboration with the company to improve their Boston and New York operations.
The Justice Department says the partnership would hinder competition
The Justice Department says that the association will cause higher fares in Northeastern airports that are busy hence is trying to block the move. They also claim that the agreement would hinder competition from other airlines in the area.
According to Merrick B. Garland, an attorney General many Americans use air travel for various reasons. He adds that to keep airlines safe and affordable, the competition must remain. The airline industry already has few competitors as four airlines control it. The move by these two airlines will further add to the problem.
The airlines, on the other hand, point out that the alliance has been happening for nine months, but the department has not reported a hike in fairs, reduced output, and low quality. The Justice Department has not made any comments.
The Biden administration has shown interest in promoting competition
The US Transportation Department approved the alliance between the two companies shortly before President Donald Trump finished his term. The companies announced the deal in July 2020. However, the Justice Department said the deal would cost consumers millions of dollars.
The airlines want the states and the Justice Department to let them continue with their alliance to prove themselves on the market. They note that they are n expansion, measures to prevent anticompetitive behavior, and oversight.
The suit displays how the Biden administration is interested in increasing fair competition. Currently, four airlines control about 80% of the market.
The agreement allows Jet Blue to use American flights in its Boston and New York areas and vice versa. It also allows them to link frequent flyer programs to five them breather capacity to compete with airlines like Delta Air Lines and United Airlines in the Northeast.
The Justice Department said that the deal also prevented JetBlue from being a disruptive force that would continually try to drive prices down.