(Trends Wide Business) — The Department of Justice (DOJ) sued two major airlines on Tuesday, saying the companies created an alliance that raised prices and reduced the choice of air passengers traveling to and from major cities. from the Northeast region of the United States.
JetBlue and American Airlines created the “Northeast Alliance” last year, which operates out of four major airports in Boston and New York. The DOJ says the two companies committed to exchanging information on which routes to fly, when to fly them, who would fly them, and what size aircraft to use for each flight.
“The department cannot allow American Airlines to further unify the airline industry, where competition is already in a critical shortage,” Acting Deputy Attorney General Richard A. Powers told reporters. Antitrust Division of the Department of Justice.
American Airlines is the world’s largest airline and, together with Delta, United and Southwest, collectively controls more than 80% of domestic air travel, according to the DOJ. Prior to the alliance, JetBlue represented a challenge for American Airlines at northeastern airports.
“Consumers will be better off if American and JetBlue remain fierce competitors, not allies,” Powers said.
The DOJ indicated that the two airlines also allegedly shared the revenue earned at these airports, removing their incentives to compete with each other. In addition, the “Northeast Alliance” allowed the parties to pool their gates and takeoff and landing clearances, known as “slots,” according to the DOJ.
A lawyer for American Airlines told Trends Wide that the company “feels confident” that the case does not provide evidence that the alliance is harming consumers.
JetBlue CEO Robin Hayes said Tuesday that the company’s “commitment to competition and low fares remains as strong as ever.”
“This is not at all like a merger with American – we have two different business models and we don’t work together on pricing,” he said. “It is also important that they have the full picture of the benefits that the [Alianza del Noreste] is providing, and I want to assure you that DOJ’s action will not affect our plans to continue to implement it. “
According to the DOJ, the airline alliance will cause hundreds of millions of dollars of damage to air passengers across the country by increasing fares and reducing choice.