U.S. Bid To Kill American-JetBlue Deal Goes To Judge

Airline lawyers and the Justice Department delivered starkly contrasting views of an alliance between American Airlines and JetBlue during closing arguments Friday (Saturday, Nov. 19, 2022, in Manila) in a case that will test the Biden administration’s aggressive enforcement of antitrust laws.

Photo Insert: Looming over the trial is JetBlue’s proposal to buy Spirit Airlines, the nation’s biggest discount carrier, for $3.8 billion.

The partnership lets American and JetBlue coordinate schedules and share revenue on many routes to and from New York and Boston, which the government argued will cost consumers hundreds of millions of dollars a year in higher fares, David Koenig reported for the Associated Press (AP).

“It is a very important case to us ... because of those families that need to travel and want affordable tickets and good service,” Lawyer Bill Jones said in federal district court in Boston.

Lawyers for the airlines said the partnership has spawned new routes that are good for travelers. They argued that during a month-long trial, the government failed to show any evidence that the deal has hurt consumers.

“It’s all just an idea,” said Daniel Wall, a lawyer for American.

When attorneys finished their arguments, US District Judge Leo Sorokin said he is still reading material hundreds of pages of material submitted this week by both sides. The government’s case is intuitive — that two big airlines working together instead of competing will reduce choices for consumers and lead to higher fares.

The lawsuit, joined by six states and the District of Columbia, is also speculative. Looming over the trial is JetBlue’s proposal to buy Spirit Airlines, the nation’s biggest discount carrier, for $3.8 billion.

Spirit Airlines shareholders voted last month to approve the sale despite JetBlue declining Spirit’s request to drop its partnership with American in order to reduce regulatory risk.

“The Justice Department has a very good case,” said Florian Ederer, an antitrust expert and economics professor at Yale University who has followed the matter. “The NEA does harm competition, it probably harms consumers. (American) has eliminated a disruptive competitor, a maverick.”

The trial featured testimony by current and former airline CEOs and economists who differed wildly on the impact that the alliance will have on competition and ticket prices.

The US Transportation Department approved the alliance 10 days before the end of the Trump administration. Soon after President Joe Biden took office, however, there were rumblings that the Justice Department was taking a closer look, and it sued to kill the deal in September 2021.

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