Sat, 10 Dec 2022

US challenges American-JetBlue alliance in antitrust trial

Robert Besser
02 Oct 2022, 03:42 GMT+10

BOSTON, Massachusetts: The U.S. Justice Department has asked a Boston judge to force American Airlines and JetBlue Airways to scrap their U.S. Northeast partnership plan, arguing that it would result in higher prices for consumers.

From the witness stand, JetBlue Chief Executive Robin Hayes claimed that the partnership was "pro-consumer," but lawyers for the Biden administration, six states and the District of Columbia urged the federal judge to break up the alliance 18 months after its launch.

The Northeast Alliance is a "de facto merger" of their Boston and New York operations, Justice Department attorney William Jones said.

In response, Hayes, who was testifying under oath, rejected a Justice Department lawyer's suggestion that the alliance meant that American had "JetBlue in their pocket."

The first day of the trial focused on JetBlue's plan to buy low cost rival Spirit, with Justice Department attorney John Davis repeatedly pressing Hayes on whether competition with Spirit forced JetBlue to offer lower prices.

Hayes struggled to answer, prompting Davis to stress that he was not answering the question.

Hayes finally said, "Sometimes we will react to what they are doing. Sometimes they will react to what we are doing."

JetBlue's proposed purchase of Spirit, which is expected to face a tough antitrust review, was defended by Hayes, who said it would create "one of the most powerful, disruptive forces that this country has seen."

The Justice Department said that the Northeast Alliance removed incentives for American to reduce prices to lure customers from JetBlue, and gave the airlines a more than 80 percent market share in flights from Boston to Washington and six other airports.

In opening arguments, lawyers for the airlines rejected the Justice Department's claims, and argued that the Northeast Alliance has produced significant real-word increases in flights and capacity since 2020.

"More output like we are seeing here is highly competitive and leads to lower fares," Richard Schwed, JetBlue's lawyer, told U.S. District Judge Leo Sorokin.

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