Department Of Justice Is Ramping Up Its Investigation Of The American Airlines – JetBlue Partnership

Last summer American Airlines and JetBlue announced a partnership in the Northeast covering New York and Boston.

After striking a deal like this, there’s a period of time for the Department of Transportation to review the deal. They allowed that time to lapse but still struck a deal with JetBlue and American to give up some slots in New York and at Washington National in exchange for DOT approval.

Competitors don’t like this for obvious reasons,

  1. American and JetBlue are the number smaller players in New York than Delta and United, this makes them competitive.

  2. Other airlines would like to have the government take more of their takeoff and landing slots, and give those slots to them.

American Airlines New York JFK Terminal 8

This allowed American and JetBlue to move forward with the partnership and announce new routes. But the competitor swiping continues.

Make no mistake this deal is good for customers. It makes New York a more competitive market, and lets scarce slots get used more effectively to match the routes passengers want. American will no longer need to squat on JFK slots.

However there’s a new administration, which has been predicted to press harder on anti-trust than the previous one. And JetBlue’s pilots are adamantly against the deal (which is odd, because it means more slots and flights for JetBlue to operate, the losers here are American Eagle pilots). The current administration is more responsive to labor concerns.

So, pandemic which has created unprecedented challenges for the airline industry aside, it shouldn’t be entirely surprising that the Department of Justice has ‘stepped up’ a probe of the partnership which has already been approved by the Department of Transportation “and is concerned the deal could lead to inflated fares at key traffic hubs.”

If you look at what the deal actually requires, though:

  • American and JetBlue have to increase seat capacity in New York, or else they lose 10 more New York JFK slot pairs. We’re pretty much guaranteed more supply of seats (and thus downward fare pressure).

  • JetBlue has already agreed not to exit JFK non-stop (non-seasonal) routes it served as of February 2020, except for Long Beach, Oakland, and Worcester, Massachusetts. They’ll remain a competitor on routes they already operate.

  • And the two airlines aren’t allowed to discuss “future fares, fare levels, or revenue management strategies” and they separately can’t discuss route, scheduling or capacity outside the scope of the New York/Boston agreement.

Artist’s Rendition Of New York, Inside American Airlines New York JFK Terminal

This deal creates competition, because on their own JetBlue and American aren’t competitive with United and Delta in New York and certainly American isn’t. The fact that competitors are mostly the ones complaining underscores this. The Department of Justice may think they’re representing consumers, but they’re really hearing from American’s and JetBlue’s competitors. The government’s review was already done here, everyone moved forward. It’s time to let customers benefit.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Welfare queen airlines what they deserve at this point – they take Daddy Biden’s money, they need to do what Daddy Biden says.

  2. You make a reasonable case Gary for your arguement. Its not Jet Blue that is the Bad Guy. The DOJ is investigating because American is headquartered in Bad Ass Texas whiich is about to reform its voting law.

  3. Given that American has not fully used its JFK and LGA slot portfolio for years even as NK is trying to grow at LGA and UA wants decent permanent slots at JFK, this move is totally appropriate.

  4. The DOJ is at it again in forcing groups together who don’t want to be together (forced integration) and keeping those that do (companies) apart. The DOJ is a criminal racket. Organized labor is a criminal racket. The U.S. is known to have the worst flight attendants in the world due to unions protecting the worst instead of advocating for the the good workers. It’s not even a pay issue. Good flight attendants may deserve to make considerably more and would make more under a free marker. Unions drag down airlines with ridiculous regulations and restrictions that force airlines into a constant state of near bankruptcy. The public has never benefited from lower prices due to the DOJ and courts blocking deals.

  5. @Jackson Waterson,

    If you knew anything about the Railroad Labor Act you would know organized labor at the airlines are hardly the animal you make them out to be. I encourage you to read the book “Hard Landings” to get a more rounded viewpoint.

  6. You wrote this: American and JetBlue are the number smaller players in New York than Delta and United, this makes them competitive.

    What on earth does the mean?

  7. “Make no mistake this deal is good for customers.”

    That is an opinion, not fact. I understand you think opening up slots at JFK will create some competition, however they’re doing that by eliminating competition from the northeast. Personally, I think maintaining separate JetBlue & AA on flights around the region is better for most travelers. Conversely, Spirit airline getting some new slots from this deal helps very few. The Big 3 rarely price match against Spirit (because it’s basically a Greyhound with wings) so unless you like ultra-low service, you should be against the B6/AA alliance! …and I say this as someone who has status with both B6 & AA and should benefit from this.

  8. I welcome the move to block closer cooperation between American Airlines and JetBlue.

    Two big but smaller players to go against 2 bigger players in this industry is better than the alternative that the so-called libertarians and industry apologists put forward to allow for reduced competition.

    I’m curious. Is reduced competition in the airline industry good for bloggers to make more money from the airline affinity credit card business?

  9. Jackson Waterson is still furious that children who are of perceived European ethnic backgrounds are friendly and otherwise mingling with those of perceived African ethnic backgrounds.

    He’s still fuming about Plessy v Ferguson being sent to the trash bin of history and his “white supremacy” and segregationist desires being called out as the enemy of all that makes America great.

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