JetBlue-American Partnership Struck Down by Federal Judge
Siding with the government, Judge Leo T. Sorokin of U.S. District Court in Boston wrote, “It makes the two airlines partners, each having a substantial interest in the success of their joint and individual efforts, instead of vigorous, arm’s-length rivals regularly challenging each other in the marketplace of competition.”
American and JetBlue did not immediately respond to requests for comment.
For the Justice Department, “it’s a big win,” said Gene Kimmelman, a fellow at the Harvard Kennedy School and Yale’s Tobin Center for Economic Policy and a former Justice Department official. “It was a very important case for the department to show that the agreement was constructed like a merger that concentrates power at key hub airports by coordinating flight schedules and airline capacity.”
A series of mergers over roughly two decades has greatly reduced the number of large airlines in the United States. In 2013, for example, American combined with US Airways. Earlier, United and Continental Airlines became one company, and Delta Air Lines joined up with Northwest Airlines. That has left travelers with fewer choices, especially at many hub airports, which tend to be dominated by one or two airlines.
Part of the Justice Department’s concern was that other airlines could establish partnership agreements, too, limiting choice for customers even further.
The ruling is a blow to JetBlue, which been trying to expand rapidly in recent years. In addition to the alliance with American, JetBlue has entered a deal to buy Spirit Airlines. The Justice Department is asking a judge to block that acquisition as well.
Source: The New York Times
