Government Plays A Weak Hand, Shifts Focus To Boston In American-JetBlue Anti-Trust Trial

Testimony continues this week in the federal government’s anti-trust trial to break up the American Airlines-JetBlue Northeast Alliance. The government shifted its focus Monday morning away from the partnership the two airlines have in New York, to their arrangement in Boston.

While JetBlue used to be the clear dominant carrier in Boston, that changed and Delta has become strong in the city over the past several years. This month JetBlue still offers the most flights out of Boston while Delta operates the most seat miles from the airport. American and JetBlue together still represent fewer than half the flights and half the seats from Boston, according to data from Cirium’s Diio Mi schedule analyzer.

The government’s argument is, essentially, that there’s no barriers to entry to grow in Boston – so American could have done it on its own. But that’s true for American’s competitors, too. The Northeast Alliance doesn’t block competition in Boston.

Indeed Delta launched a hub in Boston just before the pandemic and launched routes to counter the Northeast Alliance, suggesting that the Boston market is getting more competitive and even more so as a result of the JetBlue-American tie-up. They even sent Boston-based SkyMiles elites ‘Revolutionary Rewards’ socks!

Southwest’s COO concedes that they, too, could expand in Boston if they were to make it a priority.

If this is where the government is going then,

  • It is a fall back not to lose totally, avoid total disaster
  • Winning on Boston could simply mean a remedy where American and JetBlue partner, and keep their alliance in New York, but carve out Boston. Frequent flyers would still get reciprocal earning and redemption as well as status recognition.
  • Boston is less important, and a stronger argument for the government since the government itself doesn’t cap competition (through slots) at the airport, but as a package American still has the stronger case – and likely wouldn’t have given up as many slots in a settlement with the government to get the whole deal approved.

The government’s Boston focus is a path to avert total disaster and a complete loss for their position. But it doesn’t come close to demonstrating that the Northeast Alliance blocks competition in the city. And a government win here would inconvenience the two carriers but shouldn’t serve to cripple the deal. It would be more of a flesh wound.

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. JBLU can either keep the NEA or hope that the merger with Spirit goes through, but it won’t get both so they can decide which is more important. I’m going to go out on a limb and say there must be some reasonably intelligent people at DOJ and if they thought their case was really weak then they would not be pursuing this action along with the AG’s of 6 other states. But hey, what do I know (very little my wife would say).

  2. Remember when Delta poached a Jet Blue senior executive? Shortly after, American poached the guy from Delta? Might the Delta poach in the middle have been planned by American and the executive to offer plausible deniability? And, might Jet Blue leadership have figured out what really happened? And, might Jet Blue leadership have asked themselves in what other ways American might abuse them? And, might Jet Blue leadership determine they needed a plan B? And, might Jet Blue leadership want the DOJ to be successful in the NEA case to get them out of an abusive marriage? But, then, maybe I’m wrong.

  3. The first paragraph of this comment is meant to be extremely facetious because the assumptions behind it are suspect at best. It occurs to me that it might cost the government less to improve the air traffic control system and increase the allowed capacity in the New York area than it does to litigate this case. Of course, I could be dead wrong about that observation, and probably am. But it begs the question” How much of this would be necessary if the government and the airlines would partner to improve the air traffic control system in the country.

    But seriously, Delta is the dominant carrier at both LaGuardia and JFK. There’s really no logical reason why it should get away with having the market dominance it does there if there’s a simple and viable way to provide broad competition, which low-cost carriers simply can’t do because they don’t have enough slots. They can provide competition on a few routes, but not enough to make a real difference.

    Another point: Low cost and ultra low cost carriers don’t give away their products. They charge what the market will bear. All their lower costs allow are higher margins. In other words, lower costs don’t automatically result in lower fares.

  4. I still think there’ll be a settlement at some point in the near future. Litigation like this can last years and cost huge amounts of money and time that could be spent on better things. The lawyers are usually the only winners in lawsuits.

  5. This whole lawsuit remains very strange. It feels like random harrassment by bureaucrats.who should be working on something else, or shouldn’t even be employed in the first place.

  6. Another problem with this case is that the Federal Government previously blessed the NEA. Then the Federal Government reneges and says, I don’t care what I previously told you, I changed my mind!

    Given that precedent, what prevents the Federal Government from unraveling the slot swap between Delta and US Airways from 2011 for LGA and DCA slots?

    Maybe the REAL reason for the lawsuit is because the approval came from a Republican administration and the 2011 slot swap was from a Democrat administration, so we won’t contest that one.

  7. @Danno that was the DOT that had no current objections to the NEA but the DOJ which pursues matters of anti trust law never signed off the proposed agreement.

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