The United States justice department has filed an antitrust suit against American Airlines and JetBlue.
The government body argued the growing alliance between the two carriers had created a “de facto merger” in the New York and Boston markets, reducing competition and hurting consumers.
The suit contends the arrangement between the two carriers has reduced the incentive for them to compete in the north-east of the US and elsewhere.
The deal has the potential to “cause hundreds of millions of dollars in harm to air passengers across the country through higher fares and reduced choice,” a statement said.
“This sweeping partnership is unprecedented among domestic airlines and amounts to a de facto merger,” the Justice Department declared.
It said attorneys general in six states and the District of Columbia were joining in the lawsuit.
The action is seen as the latest effort by the Biden administration to increase competition and limit the power of large companies through antitrust actions.
The transportation department signed off on the alliance in January, just before president Biden took office.
Under this agreement, the airlines agreed to conditions aimed at ensuring that they did not behave in an anticompetitive manner.
The justice department complaint asserts that the alliance combines the airlines’ operations at the three main airports serving New York — Kennedy International, La Guardia and Newark Liberty — and at Logan International in Boston.
It said the airlines had committed to coordinate “on all aspects” of network planning, including routes, schedules and aircraft; to pool their gates and take-off and landing authorisations, known as slots; and to share revenues earned at those airports.
These arrangements, the department said, would raise prices and reduce choices.
The central argument is that the alliance will prevent JetBlue from bringing the sort of fierce competition to New York airports that is said to have led to big savings for travellers at other airports.
American Response
In a statement, American Airlines chief executive, Doug Parker, argued there was no merit to the case.
“Since January, the alliance has brought new services to customers in New York and Boston, including 58 new routes, increased frequencies on more than 130 routes and code-sharing on 175 routes, as well as new international flights to Tel Aviv, Athens and Delhi.
“Delivering on the promise of growth, the north-east alliance will offer more than 700 daily flights from New York and Boston this winter and continue investment to provide a seamless experience to customers.”
He added: “Before the alliance, Delta and United dominated the New York City market.
“The alliance has created a third, full-scale competitor in New York and is empowering more growth in Boston.
“Ironically, the department of justice’s lawsuit seeks to take away consumer choice and inhibit competition, not encourage it.
“This is not a merger: American and JetBlue are – and will remain – independent airlines.
“We look forward to vigorously rebutting the claims and proving the many benefits the north-east alliance brings to consumers.”