© Reuters. FILE PHOTO: Jet Blue CEO Robin Hayes arrives in federal court to testify in an antitrust lawsuit seeking to break up the “Northeast Alliance” partnership between American Airlines and JetBlue Airways Corp. in Boston, Massachusetts, US in September.
By David Shepardson
(Reuters) – U.S. Justice Department lawyers said an alliance between American Airlines Group (NASDAQ:) and JetBlue Airways (NASDAQ::) would harm travelers, as the airlines backtracked during closing arguments on Friday in the government’s attempt to dissolve the partnership.
The department, six states and the District of Columbia described the Northeast Alliance as a “de facto merger” of the operations of the Boston and New York businesses. Through the alliance, airlines coordinate flights and collect revenue at the expense of passengers, the administration said, noting that consumers face nearly $700 million in additional annual costs.
US District Judge Leo Sorokin in Boston plans to hold another hearing before ruling on the case.
Justice Department attorney Bill Jones said the alliance was giving airlines incentives to raise fares and that they were no longer competing.
“This is a bad deal for travelers,” Jones said, noting that it is significant because of the impact it has on families who travel and who want affordable tickets and good service.
Jones added that the government wants to ensure as much competition as possible in the aviation sector, “and this deal threatens to do the exact opposite.”
Lawyers for JetBlue and American argued that the alliance, which was announced in 2020, did not raise airfares or reduce flights. They say it has expanded flights and made them more competitive with Delta Air Lines (NYSE:) and United Airlines on the northeast routes.
Daniel Wall, an attorney for American, rejected the government’s analysis that the alliance would raise consumer prices and said “it makes these markets more competitive than they have been at any other time.”
Wall said consumers or the DOJ can file a lawsuit at a later date if the alliance proves uncompetitive. “This is not a situation where you need to destroy (the alliance’s) consumer benefits based on speculation that the other side is giving you,” Wall said.
Last month, the US carrier Spirit Airlines NYSE shareholders voted in favor of JetBlue’s $3.8 billion takeover bid, but are struggling to get regulatory approval.