American-JetBlue alliance not justified, US argues

Bloomberg

The partnership between American Airlines Group Inc. and JetBlue Airways Corp. has “absolutely no justification,” US Justice Department lawyers told a federal judge in closing arguments for the agency’s antitrust suit against the airlines.
The government is seeking to dissolve the Northeast Alliance, a partnership formed between American and JetBlue in 2020 to share routes, bookings and passengers in airports in Boston and New York City. Judge Leo T. Sorokin in Boston has heard evidence since late September and is expected to issue a decision next year on whether to break up the alliance.
“This deal is really poised to hit consumers with hundreds of millions of dollars of harm,” said William Jones, one of the government’s lawyers. American and JetBlue’s “former head-to-head competition is now replaced by collaboration.”
The trial is the latest in the Justice Department’s renewed trust-busting efforts, one of five lawsuits the agency has tried this year. It represents the first challenge the government has brought against an airline since 2013, when it sued to block the $17.2 billion merger of AMR Corp., then parent of American Airlines, and US Airways Group Inc. It also follows years of industry consolidation, which eliminated five of the 10 biggest airlines between 2005 and 2013.
Richard Schwed, a lawyer for JetBlue, said the government offered “no evidence of actual fare increases” and said the partnership has had positive benefits for consumers in the form of more flight options.
The Northeast Alliance “allows JetBlue to bring more of JetBlue to more people,” Schwed said. “That’s a good thing.”
JetBlue and American have increased the size of their fleets and opened new routes because of the partnership, he said.
The Justice Department’s insistence that American and JetBlue “are robbing Peter to pay Paul” is a “red herring,” American attorney Daniel Wall said.
“There is no pricing coordination in the NEA,” Wall said. Price, “the most important competitive distinction, is not eliminated” by the partnership.
The government hasn’t offered evidence of actual harm created by the partnership,
he said. Instead, the agency
alleges the joint venture amounts to a merger and analysed it as such. But the airlines’ partnership increased output with more seats and better schedules, Wall said.
The partnership is based on “proven alliance structures found over and over again to benefit consumers,” he said.
Sorokin said he intends to hold another hearing in a few weeks after he has considered all the evidence and filings.