But DOT did not open the deal for public comment, and its disclosures do not indicate whether the joint venture has been reviewed by the Department of Justice, which usually offers opinions on the potential competition concerns raised by airline alliances. The DOT also did not specify that the slots that American and JetBlue are selling as a condition of the alliance go to low-cost airlines, a departure from the way the Obama administration handled similar deals.
The deal comes at a time when airlines are recovering from the financial effects of the pandemic. But consumers will feel the effects for years, argue business critics.
“I am concerned that the Department of Transportation has approved the American / JetBlue alliance with no significant public contribution just days before the start of a new administration,” Senator Amy Klobuchar (D-Minn.), Who is to chair the Senate Judiciary Committee of the antitrust subcommittee. , said POLITICO. “While airlines and airline workers need support to overcome this crisis, it must not be done at the expense of consumers.”
Low-cost carrier Spirit Airlines has filed a complaint with the DOT about the deal, and Klobuchar urged President-elect Joe Biden’s administration to review the decision.
The department defended its review of the deal, adding that “the alliance remains subject to all applicable federal and state antitrust laws”.
American, the largest airline in the United States by number of passengers carried, announced the proposed alliance with JetBlue in July. The partnership will allow customers to book tickets that cover airline routes and schedules and receive reciprocity if they are frequent passengers with one of the companies. These types of agreements are more common among international, non-domestic airlines.
Inside an agreement dated 10 January between airlines and DOT, American and JetBlue have pledged not to communicate with each other about The fares they collectively charge and sell seven slots at New York’s John F. Kennedy International Airport and six at Ronald Reagan Washington National Airport.
In most cases, when airlines propose alliances, DOT opens a public process where rivals, trade groups, unions and others can offer comments and propose solutions to any lost competition. This did not happen with the American and JetBlue joint venture.
Spirit Airlines filed a complaint last week DOT on the lack of public procedure. A “conservative” estimate of the partnership, Spirit said, would lead consumers to pay $ 383 million more each year for airfare, a 5% increase in prices.
A DOT spokesman said the department followed the normal procedure, adding that the department “does not normally conduct a public procedure for reviews of codeshare or alliance agreements under” the statute that applies to the American-JetBlue agreement. The department will review Spirit’s complaint “in due course” and decide whether an investigation is warranted, the person added.
At Reagan National, American and JetBlue will account for 60 percent of the available slots, according to Spirit. At JFK, American-JetBlue and Delta, the second largest carrier at that airport, will operate 80% of the slots; at LaGuardia in New York, they will operate 81%. Although Boston’s Logan International Airport is less restricted, the pair will control most flights and, in some markets, will be the only airlines available, Spirit said.
American and JetBlue combined “are essentially monopolists in DCA and duopolists with Delta in JFK and LGA, and with United in [Newark] EWR, with no possibility of re-entering any of these airports or even Boston, where practically no ground facilities are available, ”said Spirit.
In a January 11 letter supporting Spirit’s complaint, Southwest noted that JetBlue acquired many of its slots in American Airlines National and LaGuardia after the Department of Justice demanded divestments for American to merge with US Airways in 2013. This process drew strong scrutiny from Congress at the time, with more than 100 members of the House asking the Obama administration to preserve direct flights to and from DCA.
“If American and JetBlue coordinated their services at these airports, as the press reports indicate, JetBlue would obviously no longer be considered an independent company [low-cost carrier] providing competitive discipline to American or other former carriers, ”said Southwest in your letter this week.
JetBlue and American did not respond to requests for comment. The Justice Department, which normally plays a key role in determining damage to competition in this type of transaction, declined to comment on whether it was involved in the DOT review or whether it had any concerns about the alliance.
Diana Moss, president of the American Antitrust Institute antitrust advocacy group, said she was “very skeptical” that the American-JetBlue partnership will benefit consumers.
“Low-cost operators, which have declined as a result of consolidation, are really the key to protecting and promoting competition and consumers,” said Moss, who has researched how airline mergers and alliances raise prices. “The biggest concern with this alliance is that it makes it more difficult for low-cost operators to establish themselves in the market.”
But industry analysts were less convinced that the partnership would have a significant impact on air travel options, with the exception of Reagan National.
Aviation industry analyst Robert Mann characterized the comments against the deal as a case of “green grapes”. Airlines like Spirit and Frontier would like to expand their low-fare services, but have struggled, especially in LaGuardia, he said.
Still, Mann said that low-cost airlines can always “trade” for highly sought-after slots on LaGuardia or try to get slots sold at auction.
The DOT did not specify that the divested slots should go to low-cost companies, said travel industry analyst Henry Harteveldt, which is unusual.
“The Obama administration clearly had a stronger view of preserving low-fare competition at an airport where there was a limited number of highly valuable assets,” said Harteveldt. “I was surprised that DOT did not want these slots assigned to a low-cost or low-fare airline, but I was not surprised because Elaine Chao has been very disconnected.”
He said that without DOT specifying any function for the low-fare service, a large carrier could easily take the “very precious, very valuable” slots that American and JetBlue are giving up if DOT decides to open a bid. Delta indicated during a conference call this week that it would be interested in the vacant slots.
Chris Brown, of the National Air Carriers Association, representing low cost airlines Spirit, Allegiant, Frontier and Sun Country, said the department may have felt the need to act quickly because of the pandemic, but in the end the decision is short-sighted.
“This is a case where they are stealing Peter to pay Paul,” said Brown, vice president of government affairs and policy for ultra-low-cost airlines. “We think the negative consequences far outweigh the benefits.”