But the DOT has not opened the deal for public comment, and its disclosure does not indicate whether the joint venture has been reviewed by the Department of Justice, which normally offers views on the possible competition issues posed by airlines with airlines. DOT also did not specify that the slots sold by American and JetBlue as a condition of the alliance go to cheap transportation service, a break with the way the Obama administration handled similar arrangements.
The deal comes because airlines are facing the financial consequences of the pandemic. But consumers will feel the consequences for years, critics of the agreement argue.
“I am concerned that the Department of Transportation approved the US / JetBlue alliance without meaningful public intervention a few days before the start of a new government,” said Sen. Amy Klobuchar (D-Minn.), Who chairs the Senate ‘s Judiciary Committee is chaired. antitrust subcommittee, told POLITICO. “While airlines and airline workers need support to get through this crisis, it should not be at the expense of consumers.”
The cheap airline Spirit Airlines has lodged a complaint with DOT about the agreement Klobuchar has called for the election of President Joe Biden to review the decision.
The department defended its review of the agreement, adding that “the alliance remains subject to all applicable federal and state antitrust laws.”
American, the United States’ largest airline in terms of number of passengers carried, announced the proposed alliance with JetBlue in July. The partnership will enable customers to book tickets that span both airlines’ routes and schedules and receive reciprocity if they fly regularly with one of the airlines. These types of agreements are more typical between international airlines, not domestic ones.
In an agreement dated January 10 between the airlines and DOT promised American and JetBlue not to communicate with each other over the tariffs they charge and collectively collect seven slots at John F. Kennedy International Airport in New York and six at Ronald Reagan Washington National Airport.
In most cases when airlines propose alliances, DOT opens a public procedure where competitors, trade groups, unions and others can comment and suggest remedies for any lost competition. That did not happen with the US and JetBlue joint venture.
Spirit Airlines filed a complaint last week with DOT on the lack of a public procedure. A ‘conservative’ estimate of the partnership, Spirit said, would result in consumers paying $ 383 million more for airfare each year, a 5 percent increase in prices.
A DOT spokesman said the department followed the normal procedure, adding that the department “usually does not conduct a public procedure for reviewing codeshare or alliance agreements under the law passed on the American JetBlue” agreement does not apply. The person will review Spirit’s complaint “in due course” and decide whether an investigation is warranted, the person added.
According to Reagan, American and JetBlue will make up 60 percent of the available slots. At JFK, American-JetBlue and Delta, the second-largest airline at that airport, will operate 80 percent of the slots; at LaGuardia in New York, they will operate 81 percent. While Boston’s Logan International Airport is less restricted, the few will control most flights, and in some markets will be the only carrier available, Spirit said.
American and JetBlue together ‘are essentially monopolists at DCA and duopolists with Delta at JFK and LGA, and United at [Newark] “EWR, with no possibility of new access to any of the airports or even in Boston where there are virtually no available land facilities,” Spirit said.
In a letter dated January 11, which supported Spirit’s complaint, Southwest noted that JetBlue had acquired many of its slots at National and LaGuardia from American Airlines after the Department of Justice refused to deal with American in 2013 with US Airways to merge. That process was closely scrutinized by Congress at the time, with more than 100 members of the House urging the Obama administration to preserve uninterrupted flights to and from DCA.
‘If Americans and JetBlue coordinate their services at these airports as the press reports indicate, JetBlue will obviously no longer be considered independent. [low-cost carrier] Providing South American competitive discipline to American or other legacy businesses in his letter this week.
JetBlue and American did not respond to requests for comment. The Department of Justice, which normally plays a key role in determining the damage to competition in these types of transactions, declined to comment on whether it was involved in the DOT investigation or had any concerns about the alliance.
Diana Moss, president of the antitrust advocacy group American Antitrust Institute, said she was “very skeptical” that the US and JetBlue partnership would benefit consumers.
“Low-cost carriers, which have been declining due to consolidation, are really the key to protecting and promoting competition and consumers,” Moss said. investigated mergers and alliances between airlines prices increase. “The biggest concern about this alliance is that it’s harder for low – cost servers to gain a foothold 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 described the comments against the agreement as a case of ‘sour grapes’. Airlines like Spirit and Frontier would like to expand their cheap service, but have struggled especially in LaGuardia, he said.
However, Mann said that cheap airlines can always do a horse trade for many prestigious slots at LaGuardia, or to try to pick up discounted slots at an auction.
DOT did not specify that the deposited slots should go to cheap transportation service, said Henry Harteveldt, analyst of the travel industry, which is unusual.
“The Obama administration has clearly had a stronger view on maintaining low-tariff competition at an airport where you have had a limited number of valuable assets,” Harteveldt said. “I was both surprised that the DOT did not want these slots to be designated for a cheap or cheap airline, but not surprised because Elaine Chao was very handy.”
He said that without DOT specifying a role for a low-tariff service, a major carrier could easily be choose the “very expensive, very valuable” slots that American and JetBlue give up if DOT decides to offer. Delta indicated in an income call this week that it would be interested in the vacated slots.
Chris Brown of the National Air Carriers Association, representing the low-cost carriers Spirit, Allegiant, Frontier and Sun Country, said the department may have felt the need to act quickly due to the pandemic, but ultimately the decision is short-sighted.
“This is a case where they are robbing Peter to pay Paul,” said Brown, vice president of government affairs and ultra-low-cost carrier policy. “We think the negative consequences outweigh the benefits.”